It’s official, and lovers of the boxy-but-safe brand everywhere can breathe a sign of relief this morning. Despite last minute hurdles that looked like they would block the deal, the definitive agreement between Ford and Geely was signed on Sunday, March 28. Geely will acquire the automotive pride of Sweden for $1.8 billion, and the transaction is expected to be complete by the end of the second quarter.
Ford’s decision to sell Volvo came after a disastrous financial performance in 2008. Sales in the key North American market were declining, and increased sales in emerging markets such as Russia and China weren’t enough to offset the losses. Geely emerged as the likely buyer for Volvo in October 2009.
Despite growing sales in their native China, Geely has an understated presence outside of their home market. Geely was the first Chinese manufacturer to display a vehicle at Detroit’s North American Auto Show, in 2006, but they were unable to turn this exposure into increased distribution. By purchasing the well-established Volvo brand, Geely hopes to quickly expand both their presence and their manufacturing capability on a global scale.
Will Volvo’s traditional customer base of conservative, safety minded, bland-is-a-selling-point buyers embrace a Chinese Volvo? Only time will tell.