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Ford set to offload Volvo Chinese automaker Zhejiang Geely.
Ford set to offload Volvo Chinese automaker Zhejiang Geely.
Wednesday, October 28, 2009 17 48 GMT First published Wednesday, October 28, 2009 17 48 GMT.
Swedish automaker Volvo famous throughout Europe for its chunky, ultra-safe vehicles is likely to fall into Chinese hands after the owner of the brand, Ford has chosen a consortium led by the industrial group Zhejiang Geely as preferred bidder for the loss-making company.
Sources say that Geely is the largest independent engine manufacturer China is willing to pay about 2 billion 1 2 billion for Volvo, and wants to strengthen the presence of the so-called Swedish reservoirs in the Chinese auto market increasingly rich Premium European names such as Audi and BMW are already becoming popular on the roads of the Asian nation.
A sale would be a relief that Ford tried to unload Volvo since late last year, the US company based in Detroit is likely to get a much lower price to the March 6 95bn it paid 45 billion for Volvo in 1999 .
Ford believes Geely has the potential to be a responsible owner future of Volvo and to take the business forward while preserving its core values and the independence of the Swedish brand, said the CFO of Ford, Lewis Booth.
Founded in Gothenburg in 1927, Volvo took its name from the Latin verb volvere, meaning roll The manufacturer employs approximately 20,000 employees, including three shifts in Sweden However, Volvo lost 231m 140m in the second quarter of 2009 and the sales of its vehicles fell 22 in the US this year.
Craig Fitzgerald, analyst at consultancy companies Plante Moran in Michigan, said that Ford overpaid when it bought Volvo and failed to establish effective behalf of both sides of the Atlantic He fought also until recently, with quality challenges, but said Volvo has remained a strong name it has a relatively clear identity for some stylish vehicles, different, very safe, durable This is a brand that can be built on .
Geely was seen off other potential buyers for Volvo, including a US consortium called the Crown which is led by several former executives of Ford negotiations were extended by Ford intellectual property issues is concerned about the sensitive technology shared between cars Ford and Volvo vehicles in powertrain, engine and vehicle architecture After talks in London, brokered by the investment bank Rothschild, Geely offered to keep Volvo as a relatively autonomous unit.
The Swedish government has provided emergency aid to Volvo and Saab automaker rival to keep them afloat as sales wane, although the country has been reluctant to take public ownership of automakers.
The head of the engineering union at Volvo, Magnus Sundemo, expressed reservations yesterday about the prospect of redemption Geely My main concern is whether they have what is needed to understand the Volvo cultivation way we work here and Volvo's values.
Chinese automakers have a presence more and more influential in the international automotive industry General Motors recently sold its Hummer brand to Sichuan Tengzhong of China and another Chinese company, Beijing Automotive, takes a minority stake in Saab.
News of the potential deal emerged amid other signs of financial stress in Detroit, where General Motors former financial arm, GMAC, is negotiating with the Treasury about a third portion of government support GMAC is a crucial player in financing auto dealers across the United States has already received 12 July 5 billion 6 billion of taxpayers' money, but is struggling to raise the necessary capital for its balance sheet on a stable basis.
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