China’s Car Maker Geely Acquires Volvo

Ford acquired Volvo in 1999 for $6.45 billion and it has sold out the Volvo unit to raise the funds and focus on its core Ford and Lincoln units. In June 2008, Ford also sold its two brands, Jaguar and Land Rover to India’s Tata Motors for $1.7 billion and in 2007, it sold Aston Martin to a private equity group for $931 million. Further, it is also planning to stop production of its Mercury brand.

Small Chinese automaker, Geely Holding Group, in a deal of $1.5 billion with Ford Motors Co. acquired the Volvo unit. It is a large deal for a private company and it is the biggest foreign auto acquisition in China. Because of the global economic crisis, China is encouraging their companies to acquire others at lower prices.

Geely is a privately held company that built a business selling cars, motorcycles and scooters with little government support and now it has acquired the world famous Volvo. It is very difficult for a small company like Geely to face the problems in reviving Volvo but the deal could give Geely an edge in China, which is the world’s biggest auto market and one in which foreign brands often dominate. It can also operate in the Europe.