They always say that cars are the worst investment, since they almost always depreciate in value. But Ford Motor Co. learned the hard way that this holds true for car companies as well. They bought Volvo for $6.45 billion in 1999, only to sell it 11 years later for $1.8 billion.
The Detroit automaker reached a deal over the weekend to sell their Swedish brand of vehicles to Chinese car manufacturer Zhejiang Geely Holding Group Co.
“We needed to find a new owner that would take the Volvo Cars business forward while also cherishing its unique Swedish brand values,” said Ford CFO Lewis Booth. “I am very pleased to say that we believe we have found such an owner in Geely.”
Geely’s chairman, Li Shufu, says he wants to protect the value of the Volvo brand. “Throughout our negotiations with Ford and Volvo Cars management, I have emphasized the special care with which we will manage and build this asset,” he said at the signing ceremony at the Volvo offices in Goteborg, Sweden. “I want to emphasize that Volvo is Volvo and Geely is Geely. Volvo will be run by Volvo management. It will have the strategic independence to develop its business plan, and we are determined to preserve the distinct identity of the Volvo brand.”
While Volvo will continue producing cars at their plants in Sweden and Belgium, Geely plans to produce Volvos in China.
Volvo is just the latest foreign luxury brand to be sold off by Ford, joining Aston Martin, Jaguar and Land Rover.
Ford, Geely agree to $1.8B Volvo deal [Detroit News]