Nothing is ever over until it is over in China, but Geely really does look like it has pulled off its $1.8 billion deal for Volvo.
The Ministry of Commerce has said it has approved the purchase and now a source with direct knowledge of the matter has told Reuters that the formal announcement is due today.
I should offer to eat my hat. I wrote this deal off as nothing more than a PR stunt by Li Shufu, Geely’s chairman, to get the company some more recognition both inside and outside of China.
I figured that if Ford could not turn Volvo into a success, how was Geely going to manage, all the way from Hangzhou? In addition, I never thought Ford would give up the intellectual property rights and technical know-how for the latest Volvo models. A lot of those details are built into Ford cars too.
For Geely, it is not clear how it will raise the money to keep Volvo’s Swedish operations going, something it has vowed to do, and there is a lingering suspicion that the deal is just a good way of getting its hands on the Volvo marque, together with the IP.
Ominously for Volvo workers in Sweden, Geely has set its Chinese Volvo factory to double its production, with the goal of selling 150,000 Volvos in China annually by 2015. It remains to be seen if the Chinese buyers will continue to look on Volvo as a foreign brand.
Stefan Jacoby, a former North American executive of Volkswagen, has been hired to become Volvo’s new chief executive. It will be interesting to see how he gets on.