Economy: E-PGP (ECO)
For the buyer and seller, the agreement is worth the risks.
It took over a decade for Ford to create what he called his group of Premier Auto Group around a chic European brands in 1987 with its purchase of Aston Martin, Jaguar tracking acquisitions Volvo and Land Rover it all proved a terribly expensive distraction now, it took Ford three years of difficult negotiations to dismantle the group, selling European brand in a considerable loss Aston Martin went to a British-led consortium in 2007, Jaguar Land Rover JLR was snapped up by Tata of India in 2008 and, on March 28, an agreement was signed to sell Volvo to Geely, a small but widely ambitious Chinese automaker.
The sticker price is August 1 billion a fraction of 6 45 billion that Ford paid for Volvo in 1999 the cost of Ford is even worse than these figures suggest that it has had support the Swedish automaker by years of losses and even now face other fees associated with the sale to Geely that eat much of the meager amount she gets for Volvo.
Over the years the design and Volvo's production have been closely integrated with Ford's, so it will take years to sever the contract of sale, the two sides hope to finalize in the third quarter of this year, includes a Ford's promise to continue providing Volvo with things such as the engine and powertrain technology for now, as he promised he would continue to support Tata JLR.
Where the interests of Geely Volvo was released in the middle of last year, there were doubts about whether Ford would take the risk of letting its technology and other intellectual property leaks on a Chinese company fast growing that could one day be a serious rival the announcement of the sale of Volvo said safeguards were agreed to stop what is going on but he also says Volvo will be able to sublicense some of Ford technology others, including Geely.
Although Volvo is only a small part of the production Ford, swallowing it will be a big challenge for Geely last year, most of them in China it sold just 330,000 cars, which is about the same Volvo sold worldwide Unlike most major Chinese automakers, Geely is private and, in recent weeks, there had been some doubts about whether it would obtain the necessary financing to purchase However these doubts were dispelled when Chinese state banks and, therefore, it is assumed, the government in Beijing said they would support it.
The president and founder of Geely, Li Shufu, calls himself the Henry Ford of China He and his executives like to talk big, promising to increase vehicle production 2m by 2015, however, the speech of Mr. Li to enter the European market in 2007 and the break in North America the following year proved to have little substance.
The hard truth is that most automakers border takeovers have been disappointments to name a few, DaimlerChrysler, BMW and Rover, and indeed buying Ford's Volvo and other European brands it will be a remarkable achievement for Geely if it bucks this trend but for the Volvo case has several attractions, it will access the China auto market growing rapidly; and if Geely keeps its promises, it will maintain its current management and its factories in Sweden and Belgium Volvo, having lost so much money under the wing of Ford, could do better in a more focused and self If so, Geely get a good return on its investment and a jump-start to entering the international market, as well as earn an attractive range of car price premium to sell at home.
For Ford, the failed attempt to build a European range led by leading brands has been a drain on both time cash and management This is even true of Volvo, even if it is no longer as bad as it ' was in the depths of the economic downturn Having struggled to weather the financial crisis without government bailout, Ford morality on its rivals, GM and Chrysler But his noble documents recantation left with a weaker balance sheet that may be everyone s ten automakers lean Proceeds of the Volvo sale will be little help themselves, although at least Ford derive benefits from the sale of key parts to Volvo for the coming years, while being spared of having to pump investment in the Swedish company and unless he can say he has had more success in its European divestments as GM, struggling to unload Saab and decided in the end not to sell Opel.
Ford management can now devote more time to larger reconstruction priorities of their heart US market; and make progress on a strategy called One Ford, under which all the company's models in the world will be built on a small number of common success platforms on which is crucial if Ford is to adapt to consumers changing tastes away from large gas guzzlers to smaller cars on which profit margins are slim.
Unfortunately, the deal does little to solve the auto industry's largest-capacity growing problem, especially in mature markets Indeed, as JLR sale, Ford distributes production capacity to an ambitious rival on the emerging market for big growth plans in the Ford core rich country markets However, neither Volvo nor JLR is big enough for a lot of importance in both cases dent overcapacity in Europe.
Perhaps a greater concern for Ford should be the risk of intellectual property leakage Volvo Chinese buyers, but this risk already exists in Ford joint ventures concluded in China with Chang another private Chinese manufacturer, Western bosses engine the industry assume that whatever safeguards have been agreed on paper, some of their technology will flee to their Chinese partners, but they see this as part of the price of doing business, and with, China Considering vast growth potential of its market, is assumed to be a price to pay.
Volvo delegate The Economist, volvo.
Делгейт Нов. Юж. Уэльс 2633, Австралия