I am a massive Volvo fan. They aren’t the sexiest cars in the world, but as a kid I always felt safe when I clambered into our big estate – I felt like I was in a tank rather than a car. This is why the news of Volvo’s sale yesterday has made me quite excited – because it suggests that the brand, which was previously owned by Ford, may have a chance to start off on the up again.
Although last time Volvo was sold, back in 1999, Ford paid a massive $6.5 billion for it, those types of figures haven’t even vaguely been reached this time around. Instead, the agreed price was $1.8 billion. Now, I am no accountant, but I am willing to bet that Ford won’t be happy with such a huge loss.
Sales like this show just how difficult the economic troubles have been on the car industry. Whilst dealers and brands are always waxing lyrical about the damage being less than expected, it is clear that debts have skyrockets and profits dropped to the ground. The sale of brands such as Volvo suggests desperate times calling for desperate measures, where any way to reduce debt and put the company back on top has to be seriously considered.
So, what do we know about the brand that purchased Volvo?
Well, Geely Automobiles is probably going to open up a huge area of opportunity for the flagging Volvo brand, as they are very well established in the Chinese market – expecting to sell 400,000 cars there this year. Add to this a way into the European market, and we may well be seeing a player that could start pushing Volvo back towards profit.
Geely aren’t one of the big names in the automotive industry (they started out selling refrigerators, for Christ’s sake!), but I for one am interested in what path yet another up-and-coming Chinese manufacturer with take…
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