Ford has reached a deal to sell Volvo to Zhejiang Geely, a Chinese company that first started making cars just 11 years ago. The terms of the deal weren’t announced, but Ford’s take is estimated to be about $2 billion, a far cry from the $6 billion the company paid to buy Volvo in 1999.
Geely, China’s largest domestic car company, is better known at home for lower-end vehicles, and local analysts are already warning the company to be careful to maintain Volvo’s high-end brand and reputation for safety and quality.
“The biggest concern is whether Geely can manage such a premium global brand,” John Zeng, a Shanghai-based analyst at IHS Global Insight, told AFP. “If Geely wants to keep Volvo’s brand independence and integrity, then it had better not get too involved with its operation – especially not to mix the brand of Geely with Volvo. Geely is targeted at low-end customers.”
Eric Xu, head of Timer-Auto Consulting in Shanghai, said a successful acquisition would enhance Geely’s image overseas but could hurt Volvo in the process. “It will be very challenging for Geely to safeguard the value of the (Volvo) brand,” Xu told AFP.