Ford sells Volvo to Geely

Ford is to sell its Swedish subsidiary Volvo to the Chinese car manufacturer Geely in a deal that values the company at up to $1.8 billion.  Under the terms of the deal, Geely will acquire 100 percent ownership of Volvo, its assets and intellectual property rights. The acquisition is the biggest overseas purchase by a Chinese car manufacturer. Geely is understood to have $2.7 billion of funding to invest in Volvo, including the sale price. Ford paid $6.5 billion for Volvo when it purchased the company in 1999; however, Volvo has not made a profit since 2005.┬áThe Swedish unit has been on the market since 2008, when Ford put it and several other brands up for sale. Ford is hoping that the sale of Volvo will help it pay off its debts and focus on its core brands. Geely said that Volvo would maintain its Swedish heritage and retain its own management and headquarters in Gothenburg and current manufacturing centers in Sweden and Belgium. However, a manufacturing facility will also be developed in Beijing, where Geely hopes to make 300,000 Volvo-branded cars a year. Commenting on the deal, Li Shufu, chairman of Zhejiang Geely Holding Group, said:┬áÔÇ£China, the largest car market in the world, will become VolvoÔÇÖs second home market.┬á Volvo will be uniquely-positioned as a world-leading premium brand, tapping into the opportunities in the fast-growing China market.ÔÇØ Alan Mulally, FordÔÇÖs president and CEO, added: ÔÇ£Volvo is a great brand with an excellent product line-up.┬á This agreement provides a solid foundation for Volvo to continue to build its business under GeelyÔÇÖs ownership.ÔÇØ The Chinese car market overtook the US last year as the world's biggest. More than 13 million cars were sold in China last yearÔÇöa rise of 46 percent on the previous year. VolvoÔÇÖs two key markets are currently Europe and the US; however, Geely has said it wants to develop the firm's Chinese business to be of equal size to its non-Chinese business. Volvo may get a boost from ChinaÔÇÖs plan to support its domestic brands and replace Volkswagen's Audi A6 as Chinese state officials' car of choice. Geely was founded in 1986 and started life as a supplier of refrigerator parts. It now employs 12,000. Ford is based in Dearborn, Michigan. It manufactures or distributes vehicles in 200 markets across six continents, and employs around 230,000. It has roughly 100 plants worldwide.