Can you believe that?Geely didnt provide the $VOLVO did?? //
so right now ccp controls volvo

UPDATE!!!! And my friends, pay VERY close attention to the following quote: "It is also very questionable that Geely would get real valuable technologies and talents if major assets of Volvo remain outside China," said Zhang. I think this speaks volumes as to what is going to happen. It won't be the Volvo of Sweden, and it won't be Volvo Cars of North America...the Volvo we know. It will be Volvo of China, made in China, by Chinese labor, Chinese materials... and quite possibly, something could go sour and Volvo could leave the states for good. I think everyone knows where I'm going with this, and this really weakens the arguments made on here that Geely will be good for Volvo.


Geely faces risks, hurdles in Volvo bid

Shanghai Daily, October 30, 2009

The bid by Geely Holdings Group to buy Swedish luxury car brand Volvo from Ford Motor Corp is seen as a risky move for the Chinese car maker and several hurdles lie ahead, according to analysts.

"I don't think Volvo is worth buying for Geely," said Zhang Xin, an auto analyst from Guotai Jun'an Securities Co Ltd. "There must be some deep-seated problems that caused Volvo to lose money and that could not be easily solved by Geely investing in it," he said.

Privately owned Geely was selected as the preferred bidder for Ford's Volvo Car late Wednesday. The United States and Chinese car makers agreed to conduct more detailed discussions about the possible sale.

Geely said in a statement that Chinese banks have agreed to fund the purchase, and Volvo's major assets including its headquarters, overseas plants, engineering centers, labor contracts and dealer networks would remain unchanged if it acquired the Swedish car maker.

Li Shufu, chairman of Geely, has said the acquisition is a strategic move for Geely to strengthen its position in China and also to help in the continued development of Volvo.

But several analysts questioned Geely's ability to manage Volvo as the small Chinese car maker has little experience in international management.

"It is also very questionable that Geely would get real valuable technologies and talents if major assets of Volvo remain outside China," said Zhang. "It will also be very costly for Geely as a huge investment is needed. Turning around Volvo is also difficult as the ailing auto brand targets a very niche market."

The financial details of the deal were not disclosed but it is reported that Geely is likely to pay US$2 billion for Volvo.

It could become the second major overseas acquisition by a Chinese car maker in the current economic recession after Sichuan Tengzhong Heavy Industrial Machinery Co Ltd's announcement to buy the Hummer brand from General Motors Corp.
--
Scott N

I would agree with those who are concerned that the sale of Volvo will create challenges with quality, availability, and price, as below.

First, the research clearly shows that a merger or acquisition rarely builds value for the customer. Rather, it is likely to benefit a select few and senior share holders. Corporate pratfalls are rife with examples of well-intentioned acquisitions that fail miserably, to the detriment of all involved. Examples include Rubbermaid/Newell, ITT, AOL Time Warner. Remember when Macey’s bought a discount retailer? The outcome was a disaster. Mixing compensation schedules, distribution networks, and marketing approaches rarely speaks to an understanding of the customer value proposition.

Second, Economies of Scale often lead new owners of an enterprise to fix something that is not broken. Here, a buyer is likely to use existing and known manufacturing channels to offset the acquisition cost by reducing costs. Marginal cost savings too often spread over entire product and parts lines leads to dramatic quality reduction, and an erosion of the entire supply chain, which in the example of Volvo, could be catastrophic.

Third, Commoditization often follows when a buyer fails to clearly understand the complexity of a given customer group, what drives each to purchase parts, service, and vehicles. In this example, early market entrants can charge higher prices for better quality products. If maintained, this supports the quality of a vehicle, and the parts and services that maintain it, such as the example of Lexus or Acura.

Yet in other examples of mature companies, failing to understand this may lead to attempts to increase sales by lowering quality as well as price. Here, they train the customer to value based on price rather than quality. Examples may be the hard drive industry, where hard drive size at a given price point is now how the average consumer ranks a purchase, blithely unaware that the quality to deliver this size has, by many standards, fatally affected quality. One excellent study of this was done by Harvard Professor Clayton Christensen. If the new purchaser fails to maintain price and quality much like a currency that fluctuates with markets, it is likely that Volvo will founder.

Fourth, The Value Proposition, which speaks to many of the above issues, is the relationship between price and quality. It affects absolutely every aspect of a car company from sales, to manufacturing, service, distribution, to parts. In this example the new owner of Volvo must understand the price thresholds of the client base. They must also understand the Feature, Advantage, Benefit relationship of each part of the Volvo base, and the relationship between them. For example, Mercedes charges very high prices for pats and service, the customer believes these to be of higher quality, and supports this assumption by buying these parts and service. By contrast, many other parts are poorly made, and have a price to match. Here, the consumer does not value or indeed understand the quality differences. While many would recoil at a muffler not made of a galvanized steel, it is for many outside the value proposition that they understand and live in.

So here the challenge for a new buyer will be to develop and maintain a genetic understanding of the price/quality value proposition of each part of the Volvo supply and the value customer chain. Yet the idea of Value Proposition is a moving target that must change with economic, political, and social events, both regional, national, and international. As a Volvo owner I sincerely hope that this will be the case. However, automotive history is littered with examples of poor timing and too little knowledge and understanding of the customer and markets. We, here on the Brickboard are likely to see the results before others.

960 Brickster - HBA, MBA

Hopefully this won't come to pass--there is still time and a hope that a european company or even better, the Swedish government, will step in. Chinese quality is a joke, sorry; along with chinese everything. Well, except chinese food... It doesn't matter to me--Volvo as a company I care about is dead to me since 1998 (last year 940 production worldwide). If I was going to abandon my 700-900 line I'd buy a Camry, or Accord.

Not sure why a change of ownership would affect quality or supply of parts???
--
David Hunter

Even if it came to pass, I don't know that I'd get all wound up about it. It's not like the day after the sale the new owners would come box up the whole factory and haul it off to China. An example is when Ford took it over. Some people make the claim that today's Volvo's are all screwed up because of Ford, when in fact Volvo had already begun the journey to Crapville before that transaction ever took place. And after the buyout I saw little evidence that Ford had a whole lot of influence on the Volvo line - probably some, but not a lot. I think if anything, Volvo had a much greater influence on the Ford line. I heard a whole lot about how the new Fords shared Volvo's technology, and on and on. But I don't think I recall hearing that Volvo was using much of ANYTHING from Ford.

Admittedly, the Chinese probably have very little to bring to the table technically, but they certainly have something else Ford badly needs right now - lotsa $'s. Plus, these aren't stupid people you're dealing with. They know good and well the fastest way to get up to speed technologically is to go buy it, take it apart, see how it works, and then go back home and mimic it. Sure, it will take them a while to get it right. But let's think back to the late 50's - early 60's. What was the expression? Let's see.... something about "cheap Japanese junk"? Now look where the Japanese are. (Honda, Toyota, etc.)

It's quite likely that if Volvo were purchased by someone like that, the new owners would do somewhat the same as Ford - basically leave it alone to follow it's own self-destructive destiny, use it as a learning tool, exploit some of the valuable technologies, and then after several years dump it because it isn't nearly as profitable as the models they're cranking out for half the price back in the home land. Of course Ford seems to have had trouble with that last part - building a profitable product back home. The Asians wouldn't have that problem as they're far more motivated.

They're taking Hummer (I think) they're taking Volvo, We as a country owe the Chinese a lot of money. Now they are making everything for us. Between the middle east and the far east we could be a world of hurt should they together and decide to stop doing for us!
Sad!

Dear Fellow Brickboarders,

May this find you well. China has long been an "engineering culture": many centuries ago, they built the Great Wall, major canals, etc. That the Great Wall (like France's Maginot Line) did not keep out invaders isn't the issue: the wall, well-built, is still a wonder to behold. After 150 years of mismanagement - by royal fools and Communist thugs - China is getting back to its roots: solid designs and top-notch products.

In an engineering culture, the thoughtful - who make good products - are respected and rewarded. This is so in North America (Canada/US/Mexico), South America (Brazil), the European Union (Germany/Italy/Sweden/France/Czech Republic), Asia (India/Japan/China/S. Korea). A top-of-the-line, Brand name power tool marked "Made in Brazil" or "Made in Korea" will work perfectly: use it with confidence.

Thus, a Chinese firm's purchase of Volvo could be an excellent outcome. I'd guess the buyer looks to Volvo as a way to establish itself as a producer of quality goods. If so, they will not "hollow out" the Volvo brand, by producing junk. Rather, they'll strive to make top-notch products.

They surely know that Volvo-owners are quality-conscious. Thus, it will not be long, before we know, whether or not Zhejiang Geely Holding Group Co. Ltd., will leverage Volvo's reputation, or destroy it.

Yours faithfully,

Spook

It's a cryin' shame. This started 10 years ago when Volvo decided to get out of the consumer market and concentrate on the commercial market. So they sold out to Ford.
--
1986 Volvo 245, original owner

Wow, and I thought Ford owning Volvo was bad enough...

I'm just gonna shut my mouth now.