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Volvo sale - Geely signs purchase agreement: Volvo is sold to Geely

Volvo, Geely
Volvo sale - Geely signs purchase agreement
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The name Volvo comes from Latin 'I roll' and Geely from Chinese 'happiness'. It remains to be seen whether, after eleven years as a Ford subsidiary and the final takeover by the Geely Group, the Swedish carmaker is rolling towards a happy future.

Financing convinces Sweden

' This is a milestone 'said Geely boss Li Shufu on Sunday (March 28th) when he signed the purchase agreement with the previous US parent company . And it is actually safe now: With the Volvo -Takeover, the Chinese are rising to the prestigious top league of the auto industry as owners for the first time in terms of technology. In order to seal the purchase agreement in Gothenburg, Li Shufu succeeded in making works council members who had become skeptical with new information about the previously secret loan financing. 'Now we feel a lot better. We stand behind this sale,' said works council spokesman Glenn Magnusson at Volvo's headquarters in Torslanda.

Volvo is a prestige object for Geely

Sweden's Minister of Economic Affairs Maud Olofsson posed when presenting the deal between Ford- CFO Lewis Booth and Li Shufu to demonstrate government support. Ford and the second largest Chinese car company had already joined forces December agreed in principle. The longer the signatures were delayed, the more restless the Swedes became: Does the Zhejiang Geely Holding Group actually have enough capital behind it to cover the high development costs in addition to the purchase price of 1.8 billion dollars (1.3 billion euros) new models, investments, the announced expansion in the Far East and new fluctuations in the crisis?

For Beijing, the takeover of the Swedish automaker with world-wide admired cutting-edge technology is also a prestige project. The luxury brand Volvo, founded in 1927, stands for a completely different car technology than the young upstart Geely with his still quite simple model range andtwelve years of production experience.

The fact that Geely is heavily subsidized by its own government could still be a stumbling block for Volvo: Shortly after the announcement of the sale by Ford, the Swedes have a loan approval of 445 million euros from the European Investment Bank (EIB) for new developments. It is still uncertain whether this will also apply to the state-supported China group.

Li Shufu should also need this help despite various loan commitments from the Far East and Europe. With 10,000 employees and an annual production of 300,000 cars, the future Volvo mother is smaller than the daughter. The Swedes produced 375,000 cars in 2008 with more than twice as many employees in their own country and in Ghent, Belgium.

Volvo hopes on the future market of China

V above all the prospect of direct access to the gigantic growth market of China is considered the great 'promise of happiness' - like the name Geely also suggests. Li Shufu has given the Swedes the prospect of doubling their sales figures and plans to build a new production facility near Beijing for this purpose. On the other hand, he has made a great promise to keep research and development in Gothenburg as well as production for Volvo's main markets. The Volvo production in Ghent, Belgium, which is classified as threatened, is to be continued.


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