Ford Says Geely Closer to Winning Volvo

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2010 Volvo C30 R-Design

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Volvo may be a step closer to new Chinese owners this morning, as Ford Motor Company says China's Geely is the lead bidder for the Swedish car brand.

In a press release this morning, Ford named Geely and said it thought the Chinese company "has the potential to be a responsible future owner of Volvo and to take the business forward while preserving its core values and the independence of the Swedish brand."

Ford's been trying to sell Volvo for more than a year. The latest piece in its global empire to go, Volvo would follow Aston Martin, Jaguar and Land Rover in the exodus from Ford. The American automaker is selling the brands to re-focus its business on the core Ford, Lincoln and Mercury nameplates.

Ford has been negotiating with Geely for most of the year. Given China's emerging influence in global car design and marketing, Ford has expressed concern about intellectual property from Volvo and Ford going directly to China's auto industry--everything from safety equipment to plug-in hybrid technology. Nevertheless, the company seems to be lining up a future cooperation with Geely/Volvo, including sharing components and possibly even car platforms, though it points out in the release that it's not interested in keeping a stake in the Swedish carmaker.

Sources at Volvo have told TheCarConnection that a future relationship with China would leave Sweden as the center of product planning, marketing and some initial engineering. Geely's China-based engineers would execute mid-level engineering and manufacturing development at a savings of up to 30 percent from high-cost Sweden. Volvo would also produce a model in a Geely factory in China to expand the brand's global presence, but the goal would be to leverage Volvo's reputation and brand value, teamed with lower-cost Chinese manufacturing.

According to a previous report, Geely hopes to start production of Volvo cars in a new factory in the Guangdong Province of China. As part of the deal, Geely will reportedly invest up to $10 billion in building the Volvo brand and the first model to be fully designed under the guidance of the Chinese automaker will be the next-generation XC90 due in 2011.

From here, Ford and Geely will enter "more detailed and focused negotiations" over Volvo. Ford suggests in the release that it may decide not to sell Volvo at all. However, in the months since Ford put Volvo on the market, it's moved to separate the company as a business unit, and it's begun to split product development away from the Swedish company. New Ford models for North America, such as the 2012 Ford Focus, will share platforms with European Fords--and not with future vehicles like the replacement for the Volvo S40 / V50 sedan and wagon, which share a platform with the current European Focus.

Where the Geely sale would leave Volvo's future lineup is uncertain. The company recently unveiled its 2010 XC60 crossover and a refreshed C70 Convertible, with a new S60 sedan to come early next year. A delay in any other model programs of six to 12 months is likely during a transition in ownership.

Ford gave no timeline to complete a sale. Incidentally, Ford bought Volvo for $6.45 billion back in 1999 and has since written down its value to less than $2.4 billion. With the state of the industry and the economy in general, however, the final sale price could be substantially lower.

[Ford]