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Volvo welcomes Geely takeover

Geely chairman Li Shufu said Volvo would retain its identity and strategic independence.

In welcoming the $2 billion takeover of Volvo Cars Corp by the Geely automotive group, Desselss said it would be business as usual in Australia.  "Now that it's done I think we can move forward with a lot more certainty and conviction," he said.

Desselss welcomed yesterday's announcement that the Geely car company will pay Ford $2 billion for Volvo Cars Corp.  The price includes a $200 million note and the remainder to be paid in cash. Ford bought Volvo for $6.5 billion in 1999.

"It's a bargain for Geely," Desselss said. "I don't think too many Western companies have that sort of money."  Desselss said Geely understands where Volvo should be heading.

"They want Volvo to continue to grow and they're prepared to invest in it," he said.  Desselss says the biggest opportunity for Volvo was in the Chinese premium market.

"The Chinese premium segment is scheduled to grow quite significantly over the next five to 10 years.  It is expected to grow from 40,000 cars to 600,000 cars by 2019.

"There are massive growth opportunities for any manufacturer in China.  Clearly, as a Chinese-owned company now obviously that's got to improve quite dramatically."

Geely is one of the fastest growing Chinese brands, with a range of competent small cars.  Last year it sold more than 325,000 vehicles there, slightly less than Volvo's figure of 334,000 cars globally.

The Swedish brand already has a small presence in China, selling 15,000 locally built S40 and S80s there last year.  However, Geely executives believe Volvo can sell upwards of 200,000 cars a year in China alone.

Under the deal Ford will continue to provide Zhejian Geely Holding Group Co Ltd with powertrains, stampings and other vehicle components.  It will also provide engineering and IT support and access to component tooling for a set transition period.

Geely chairman Li Shufu said Volvo would retain its identity and strategic independence.  The Ford sale comes on the back of General Motor's decision to offload Saab to the Dutch sportscar maker Spkyer and Hummer to the Chinese.

Geely roughly translates to "I am lucky".  It's Volvo who could be the luckiest.