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Chinese carmaker Geely today has sealed a $1.98 billion deal to buy Volvo Cars from Ford. However Ford spokesperson Sinead McAlary says the Blue Oval will still be getting engines, safety technology and other assets from Volvo for a while.
“Volvo will continue to supply us with engines, stampings and other components for a period of time,” McAlary says, although she declined to predict how long that ‘period of time’ would be. After today’s signing, Zhejiang Geely Holding chairman Li Shufu said he saw huge untapped potential for Volvo in international markets and especially in China, which has not only the biggest but also one of the fastest-growing car markets in the world.
"I see Volvo as a tiger. (The) tiger belongs to a forest, it can't be found in a zoo ... We need to liberate this tiger,'' he told a press conference after the deal was inked at Volvo Cars headquarters in Gothenburg, southern Sweden.
"The tiger has a heart and it lies in Sweden, (and) in Belgium but it's power should be projected all over the world. I see China as one of the markets where Volvo can show it has the opportunity to liberate itself,'' he said.
In the face of concerns that the Chinese group would slash jobs in Sweden, Geely said it would keep Volvo Cars plants in Sweden and Belgium and was considering opening factories in China for the local market.
Geely said it had not only secured financing for the $US1.8 billion it was paying Ford Motor Company for Volvo, but was also eager to keep the loss-making Swedish carmaker in operation. It also said the deal, which Ford initially agreed to in December, included agreements on intellectual property rights as well as supply and research and development arrangements between Volvo Cars, Geely and Ford.
The deal will bring to an end Ford's decade-long association with the premium Swedish brand, known for its sturdy, family-friendly cars. For Geely, which started as a refrigerator parts maker, the deal marks a new chapter in its international expansion after two of its Chinese rivals failed to take over Western brands, Hummer of the US and Saab of Sweden.
The deal had initially caused consternation among unions at Volvo Cars, which employs about 22,000 people worldwide, including 16,000 in Sweden. Unions had voiced opposition to the deal on grounds that it was vague on expansion plans and possible layoffs.
Three Volvo unions this week pressed for details "on the capital that will finance Volvo's daily activities, investment on future projects and the production target of 600,000 vehicles by 2015''. On Saturday they pronounced themselves satisfied.
In addition to preserving Volvo Cars' factories in Sweden and Belgium, Geely said the Swedish company would be run as a separate company with its headquarters in Gothenburg. With a workforce of 12,000 people, including 1600 engineers, the Geely group has grown into one of China's largest private carmakers since it launched its auto manufacturing business in 1997.
It operates six car assembly and power-train manufacturing plants across China with a combined production capacity of 300,000 cars per year. The firm also owns nearly 500 dealerships and 600 service stations in the country.
Geely has an overseas sales and service network of nearly 300 outlets and runs plants in foreign countries including Ukraine, Russia and Indonesia. Overseas sales have totalled less than 200,000 units.