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#220 of 247 Re: a new battle [nippononly]
Dec 04, 2009 (8:08 am)
I just don't see Volvo going away. They have lots of new product out and have had sales up consistently month after month. We have almost gone to a waiting list on the XC60. I have two cars to sell for the next couple of months and all the rest are ordered to spec with deposits. One of the cars I have to sell is a demo and it will go before the end of the year.
By next summer every Volvo model but one will have been completely redesigned or refreshed since 2007 The XC90 is the only one left to be resigned and that will happen in 12-18 months.
#221 of 247 Re: a new battle [british_rover]
Dec 04, 2009 (1:24 pm)
I don't think Volvo will go entirely away, no, but I wonder how it will change in the next 10 years if it becomes a subsidiary of Geely in China.
For one thing, once all Volvos for global consumption are being built in China (which seems inevitable to me in the long term if Geely succeeds in buying it), will they be as popular?
#222 of 247 so is it official then?
Dec 23, 2009 (1:53 pm)
Volvo is the newest subsidiary of Zheijang Geely Holdings of China, or at least it will be next summer:
Ford Set to Close Volvo Sale to China's Geely by June
Ford Motor Co. confirmed Wednesday details of its sale of Volvo to China's Zheijang Geely Holding Group Company Ltd. have been settled, and the deal likely will close in the second quarter of next year.
Saying more information would be revealed when the final documents are signed in the first quarter of 2010, Ford provided no details about the terms of the sale, including the price. Experts estimate the price $1.8 billion, making it the largest overseas acquisition by a Chinese automaker
That's a long name, Zheijang Geely Holding Group Company Ltd. Not so catchy when set before, say, S60. "Hello, I would like a Zheijang Geely Holding Group Company Ltd. Volvo S60, can you show me one?"(!!)
All Volvos manufactured in China for export within ten years, mark my words....
#223 of 247 Re: so is it official then? [nippononly]
Dec 23, 2009 (2:14 pm)
Killing the brand's appeal in western markets.
Maybe the cars will end up with some nifty German styling
Dec 30, 2009 (6:49 pm)
Ford lost more than $4.5 billion on the purchase of Volvo, which it fully acquired in 1999.
Geely has indicated that it wants to maintain Volvo's production in Sweden, where the labor leader on Volvo's board said he likes what he hears of the sale.
Of course, that is what they would say NOW....might be a different story once the acquisition is complete.
It's interesting the way this article is written, they almost make it seem like Volvo will be the automaker that teaches the Chinese how to be a full-fledged global automaking force.
The agreement, which Ford said it expected to sign in the first quarter and close in the second quarter, would be the largest acquisition of a Western auto brand by a Chinese company.
It comes at the end of a year that may see China overtake the United States as the world's biggest auto market, a feat that would have been unthinkable only a few years ago.
.....Chinese automakers have been short on the know-how to make quality cars, although they have been making rapid advances, and have sought the technology and intellectual property to improve their product lineups.
I guess they could have a worse teacher. It seems clear that China is going to replace North America as the center of the automaking universe within a decade or two.
Jan 01, 2010 (1:58 am)
In The Path to Globalization of China's Automotive Industry (GLG News May 18, 2009), I described the motivation and steps to be taken for China's automotive companies to go global. The recent move by Zhejiang Geely Automotive Group to acquire Volvo from Ford represents the most ambitious move to date for a Chinese vehicle manufacturer to accelerate the process of transforming into a global automotive player.
By selling the Volvo car brand, Ford had taken a major step of shedding ifs portfolio of loss-making brands that previously comprised its Premier Automotive Group. In doing so, Ford realizes its objective of sharpening its focus down to its core mass-market brands. This represents a clear and sound strategy for Ford to focus its management attention and investments in the area of the business is understands best. But how does this deal benefit Volvo and its new suitor, Geely?
Rationale for the Acquisition of Volvo
The roots of the deal require understanding of the way Geely's Chairman Li Shufu views the auto business. Founded in 1986, as a manufacturer of refrigerators, Geely in the early 1990's expanded into motorcycle parts and eventually motorcycles and scooters. After rapidly expanding volume and scale, Geely began producing automobiles in 1998.
Admittedly, Chairman Li’s initial view of automobiles was quite simplistic. His initially view of a car was essentially “a sofa with 4 wheels”. However, Li has quickly become an expert in the car business and increasingly demonstrates an understanding of what needs to be done to become a competitive car company. He has already become quite critical of his initial understanding of the complexities of the automobile and the complex ingredients behind building global brands.
Specifically, Li recognizes the importance of technology and the capability of developing technology to an automotive company. He also has grown in his appreciation for how multi-national companies must be capable of self-development of technologies of the products they sell.
China and its car companies believe that the country which produces and consumes the most automobiles must be competitive on the world stage. However, leaders like Li Shufu understand that selling cars in China is not the same as in developed countries. Selling affordably-priced cars to the vast number of entry-level Chinese consumers is a significant step away from the goal of selling Chinese-branded cars to experienced consumers in mature markets.
Geely's acquisition of Volvo is intended to accelerate the process of achieving this goal.
Geely’s Approach to Integration:
The industrial revolution started late in China, and is happening on a much shorter time schedule. Chinese companies are trying to achieve what took many decades for Japanese and Korean companies in a much shorter time frame. Geely will take the approach of “standing next to companies and learning from them”. They must find companies to associate with and transfer knowledge from them. Their recent partnership with Manganese Bronze to produce London Taxi parts and vehicles, along with the acquisition of Australian gearbox maker Drivetrain Systems International were examples of this approach.
However, just taking pieces is not sufficient. The approach Geely is taking in the acquisition of Volvo is to study the entire ”business system” and integrate this into Geely's global strategy.
Geely is based in Zhejiang province, which is a haven for export-oriented companies. Chairman Li is adapting this mindset to into Geely’s strategy: a fundamental belief that a viable business must eventually become global and achieve the capability to sell its products around the world.
Geely's approach can be summarized:
1. Learn the Volvo “business system” and get in the global game
2. Use this opportunity to promote the corporate Geely name world-wide
3. Learn to manage a high-end car brand: essential skills for to become a global car company.
Geely describes itself as the “poor boy from the country”, while Volvo is the “rich girl from the city”. Geely believed that for the marriage to be successful, certain commitments must be made. Geely therefore strives to preserve Volvo's:
1. Brand Equity
3. Manufacturing and R&D in Europe (to preserve "European-ness")
4. Relationships with Suppliers and Distributors
5. Management Team (use Volvo management to run Volvo, similar in approach to Hong Kong integration: “One Country, Two Systems”
6. Relationship with Labor Union
While the viability of Volvo’s global business may be challenging in the near-term, Geely believes:
1. Volvo is a small percentage of Ford’s overall business, and is not core to Ford’s global strategy. Volvo is simply not a priority to Ford.
2. In contrast, Volvo WILL BE core to Geely’s global strategy and will be therefore more highly valued.
3. Ford has not placed sufficient emphasis on Volvo in the emerging growth markets – especially China.
Volvo today suffers from a lack of scale across their product portfolio. Volumes are evenly distributed across the portfolio, which creates a cost structure disadvantage versus other global players. By having a number of low-volume products burdens Volvo with high investment with limited scale, which is problematic for a brand trying to compete internationally.
Geely believes there is SIGNIFICANT upside potential for Volvo in the China market. Simply put, it is believed that If BMW and Mercedes-Benz can sell over 50,000 cars and Audi can sell over 100,000 cars, then Volvo has the opportunity to grow significantly as a European luxury brand in China. To achieve this, Volvo must be understood in China as a European brand, not just a Scandinavian brand.
There will be very little conflict with Geely’s brands, therefore very little brand tension among the parents. In addition, Ford very likely did not leverage low-cost global sourcing to achieve a more competitive cost structure for Volvo. Geely will seek to achieve sourcing efficiencies and cost benefits through further localization in China.
Geely will likely use Volvo to challenge Audi’s position as the “government official’s car”
While Volvo and Geely should have their own strategies as well as management, business processes (such as Sourcing and Product Development) can be shared, however technology sharing will likely require legal/IP clearance. The partners will also need to align key Volvo and Geely strategies including how to address New Energy/Low Carbon initiatives.
While marrying Volvo appears to be quite ambitious for "poor boy" that has only a little more than a decade of automotive experience, the industrial logic appears to be quite pragmatic and sound. With the proper attention to the process of post-acquisition integration, Geely can indeed use the Volvo to accelerate th
#226 of 247 Re: Interesting read [ignitepassion]
Jan 01, 2010 (1:40 pm)
Geely may get some more modern technology from Volvo, but Volvo vehicles have been sort of OBE for awhile now. I don't see Volvo cars getting the cachet of a BMW in China any time soon either. Volvo no longer has the safety edge to itself and its cars seem somewhat mediocre for the price.
Jan 03, 2010 (10:32 pm)
Sell Geelys? Volvo dealers ponder possibility
Volvo dealers don't know whether a sale of the brand to China's Zhejiang Geely Holding Group means they'll get an opportunity to sell inexpensive Chinese cars in the United States.
But it "sounds appealing," says Mark O'Steen, owner of O'Steen Volvo in Jacksonville, Fla. "I'll try anything. It is just another niche that we don't cover, and hopefully they do have some potential in the United States."
On Dec. 23, Ford Motor Co. said it expected to close a deal to sell its Volvo unit to Geely in the second quarter. Like other Chinese brands, Geely eventually wants to sell cars in the United States. To do that, it needs a distribution channel, which the Swedish brand could provide.
http://www.autonews.com/apps/pbcs.dll/article?AID=/20100104/RETAIL07/301049943/1- - 078#
Well, that would certainly add an air of exclusivity to Volvo dealerships, with those Geelys all over the front lot...
I guess I didn't realize just how desperate those Volvo dealers are after a couple of very lean years.....
#228 of 247 Re: really?! [nippononly]
Jan 04, 2010 (8:41 am)
That would be amusing...my local Volvo dealer also sells MB, Porsche, and Audi. I suspect they'd be dropping the Volvo franchise if they had to sell those things. Although it might make good copycar comparisons if Geely has another fake C-class.
#229 of 247 spin-off is working?
by Stever@Edmunds HOST
Apr 06, 2011 (12:14 pm)
"Volvo, another brand sold off by Ford, is also pushing to build scale, in part by expanding in China, the home market of its new parent, Zhejiang Geely Holding Group Co. Last year, its global sales rose 11% to 373,525 cars, though they slipped 12% in the U.S., Volvo's biggest market."
Cast-Off Car Brands Find a Road Back (Wall Street Journal)