Acquisition of volvo to finish before Xmas

Eventually, Mr. Li Shufu can have a short break before Christmas, because Geely will complete all the negotiations about acquisition of Volvo and sign an agreement before Christmas. Sohu Auto gained information indicating that Geely would soon announce the acquisition of Volvo.

The informed source said that negotiations including intellectual property, the purchase price, transitional arrangements, assets delivery time and Volvo’s future development strategies and all the issues would be called an end before Christmas. Subsequently, Geely and Ford Motor Co. will sign a definitive agreement and deliver asset. This process will last about six months or so.

　　Where does the 1.9 billion come from?

An insider of the deal told Sohu Auto, Geely paid $ 1.9 billion for the acquisition of Volvo Car Corporation, which is less than one-third of $ 6.4 billion paid by Ford for the original acquisition of Volvo.

But for Geely Automobile, the 1.9 billion U.S. dollars is definitely not a small number. Some media once reported earlier that Geely Automobile has already reached a financing agreement with Bank of China and other two banks in China providing some purchasing funds. Sohu Auto learned, Bo Hai Industry Investment Fund will also offer fund for Geely’s acquisition of Volvo. Bo Hai Fund is a large-scale industrial fund, whose establishment is approved by State Council after reported by Tianjin Municipal Government. Sources pointed out that Tianjin provided the financing support with the hope that Volvo could select Tianjin when lands in China in the future.

　　Li Shufu’s management strategy: Volvo is ruled by the staff of Volvo.

What Geely’s acquisition of Volvo concerns the outsider world the most is whether Geely has the ability for Volvo’s operating and management, and what’s more set up a stage for its future development.

An insider disclosed that when dealing with the issue of how to well operate and mange Volvo, Mr. Li Shufu has his idea that Volvo is rule by the staff of Volvo. The insider added, after the acquisition of Volvo, it takes a long transition period for Geely to well run Volvo. During the transition time, Geely will remain Volvo original management team, plant facilities and research and development facilities, at the same time Volvo’s corporate values and cultured will obscure Geely’s respect.

In the future, Geely will establish an international management team to operate and manage Volvo. The team is composed by management staff with a global vision. To Sohu Auto’s knowledge, Geely is fully prepared for the acquisition of Volvo. A lot of preparatory work has been done in advance. Geely has already organized huge buy-out teams. It is said the team in Beijing is composed of hundreds of people.

　　Geely will improve capacity utilization in Europe and open up markets in emerging countries.

One of Geely Automobile’s priorities is to raise the factory capacity utilization in Europe and consolidate markets in European and American developed countries, more importantly, to help Volvo to actively explore the market share in emerging markets. At present, Volvo in Europe has a capacity of about 560,000, but only output 0f 35 million, capacity utilization rate only around 60%. When in Ford, Volvo faces internal competition for the host of brands and car models under Ford Motor whose main market is also in Europe and the United States.

Currently, in the emerging markets including China, sales of luxury cars are growing dramatically. Improvement of market share in emerging markets is urgent for Volvo. However, it is said that Geely Automobile is currently in on hurry to consider the issue of China’s domestically production. If the production capacity in Europe is not enough, and it will comes to China. As for the production of Volvo S40 and S80L in Changan Ford Mazda, it is said that there will be an entity organized by Geely and the other partners in Changan Ford Mazda interior to talk all the production of Volvo’s car models. The entity stands for the Ford Motor, Changan Auto and Mazda Auto. Geely Auto believes that Volvo should be achieve greater sales in China. At present, Volvo cars sales reached more than 10,000 units annually, lagging far behind other competitors in the luxury automobile. (Translator: Qinghua/Sailor)

　　See Original Chinese Report Please Click