Zhejiang Geely Holding Group came to a binding agreement today with Ford to purchase Volvo for $1.8 billion. In many circles this purchase is seen as a massive opportunity to push deeper into the European market. This is a stock purchase deal and still needs to be approved by regulators. There are no obvious problems with the deal and once finalized will give the new owners of Volvo a huge edge in the worlds biggest car market, China. Geely is one of the top10 car manufactures in China and within the Chinese market this sudden purchase was seen as a coup. Ford originally purchased Volvo in 1999 for $6.45 billion dollars today sold the brand for a $200 million note and the rest in cash. This influx in cash should help stabilize Ford even further. Since Toyota’s sudden acceleration and brake problems other manufactures have been crushing them in the new car purchases. Leading the charge has been Ford who posted a 43% jump in sales in February alone.
The Zhejiang Geely Holding Group chairman Li Shufu, stated that manufacturing would continue in Sweden and Belgium for now but the Chinese manufacturing market would also be explored. In many ways this makes sense, since the cost savings on manufacturing and shipping to the largest market in the world would be significant. Given the rapid growth of the Chinese car market and the air pollution level the sooner an electric or hydrogen solution the better. The Chinese government has put forth a series of incentives for the rapid development of the green or low emission cars. With Volvo recognized around the world as a quality brand in safety and comfort the addition of multiple makes of low emission cars would make the company a smash success within the new home country.