China’s Geely Automobile (吉利汽車), one of the nation’s largest private carmakers, said yesterday it was “fully prepared” to make good on a bid to buy premium Swedish brand Volvo from US auto giant Ford Motor Co.
Ford said on Wednesday it had tapped Zhejiang Geely Holding Group (吉利汽車控股) as the preferred bidder for its Volvo Cars nameplate and would step up negotiations with a consortium led by the Chinese automaker.
“We are fully prepared ... to make every effort we can to try to make [the bid] a success,” Geely spokesman Yuan Xiaolin (袁小林) said, adding that the Hangzhou-based firm had “a complete financing plan” for the bidding.
STRATEGY
“We made the big decision to take part in the bidding after careful consideration and assessment. We think it is in line with the long-term development strategy of Geely,” he said, without elaborating.
When asked how long the talks could last, Yuan said it was too soon to speculate about a timeframe.
Ford emphasized that “no final decisions had been made.”
The Geely spokesman also declined to comment on the financial terms of a possible deal.
In a statement issued on Wednesday, Geely said under its bid, supported by Chinese banks, Volvo’s existing production and research and development facilities, union agreements and dealer networks would be maintained.
Geely’s confirmed bid for Volvo is evidence of China’s growing economic clout, but the company will face the tough challenge of ensuring the Swedish brand’s reputation for safety, analysts said.
CONCERN
“The biggest concern is whether Geely can manage such a premium global brand,” said John Zeng, a Shanghai-based analyst at IHS Global Insight.
“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,” he said.
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 said.
“A successful bid is only the first step in a successful acquisition — it’s difficult to digest what you buy. That’s the challenging part for Chinese companies [that] want to go abroad,” he said.
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