Geely Automobile is now formally the "preferred bidder" for Ford’s Volvo unit and, although this is a valuable brand, it could take years to see profits from the loss-making Swedish carmaker.
Home-grown Geely, which means "lucky" in Chinese, is hungry for modern and innovative technologies that can upgrade its cars. If it can produce Volvos like the model slamming through a rally in our illustration it has it made.
Chen Qiaoning, an analyst with ABN AMRO TEDA Fund Management, "If its parent indeed gets Volvo and the deal serves it well, the listed firm would benefit tremendously. But if they are unable to handle Volvo…the listed company will suffer."
The hope is that Geely, which used to make China’s cheapest cars, could reap benefits in better brand recognition and new technology if its parent, Zhejiang Geely Holding, can buy Volvo and turn the company around.
Volvo is a world renowned name and although it has been losing money it still has a very solid line-up of technologically advanced models. The writer should declare his bias in that he is a Volvo fanatic.
Zhejiang Geely said its bid is supported by Chinese banks and it will now embark on further detailed discussions with Ford.
People’s Daily News said that media reports suggested the price tag for Volvo could be closer to $2 billion than the $6.45 billion Ford paid for the Swedish carmaker in 1999.