Does Volvo’s turning Chinese ensure its survival?

By John LeBlanc Here we go again. For the second time this year, a beloved Swedish auto brand has been sold off. But given the initial news that after a long courtship China’s Geely has finally put pen to paper on acquiring Volvo from Ford, the Swedish brand’s survival looks more promising than sister Swedish brand, Saab. First off, I don’t care the how the accountants spin it, Ford lost money on Volvo. That’s why it was willing to sell it for $1.8 billion U.S. after buying the Swedish brand in 1999 for $6.4 B. But you could also argue that Ford spent way more trying to keep Volvo relevant compared to what Government Motors did when it had Saab. Yes, like Saab, Volvo is also a regional automaker. It relies heavily on Europe for production and on Europe and North America for most of its sales. However, unlike Saab’s latest saviours, Volvo’s new caretakers have the wherewithal to keep the brand more than just on life support “I see China as one of the markets where Volvo could show us it has the opportunity to liberate itself and show the potential that is has. That is the rational for the deal,” Geely founder Li Shufu said. “We want to stabilize the brand in the traditional markets of Europe and North America and, at the same time, develop our business in emerging markets including China.” In the short term, the much-needed new Volvo S60 is coming later this year, this time as a genuine salvo aimed at compact sports sedans the BMW 3 Series and Audi A4. There’s even a sports wagon variant on the way as well. Do you think Geely will do a better or worse job than Ford? Will customers still buy into Volvo “Swedishness” despite its new Sino owners? [Sources: Straightline, Automotive News]

Comments