Ford sell Volvo Cars to Chinese
29th March, 2010
Ford Motor Company announced overnight that it has
entered into a definitive agreement to sell Volvo Car Corporation and related assets to Zhejiang Geely
Holding Group Company Limited.
The sale is expected to finalise in the third quarter of 2010, and is subject to customary closing
conditions, including receipt of applicable regulatory approvals.
The purchase price for Volvo Cars and related assets (primarily intellectual property) is $1.8
billion (U.S.), which will be paid in the form of a note in the amount of $200 million (U.S.), and the
remainder in cash. The cash portion of the purchase price will be adjusted at close for customary
purchase price adjustments relating to pension deficits, debt, cash and working capital, the net effect
of which could be a significant decrease in the cash proceeds to Ford.
“Volvo is a great brand with an excellent product line-up. This agreement provides a solid
foundation for Volvo to continue to build its business under Geely’s ownership,” said Alan Mulally,
Ford’s president and CEO. “At the same time, the sale of Volvo will allow us to further sharpen our
focus on building the Ford brand around the world and continue to deliver on our One Ford plan serving
our customers with the very best cars and trucks in the world.”
Ford will continue to cooperate with Volvo Cars in several areas after the sale has been completed in
order to ensure a smooth transition, but will not retain any ownership in the Volvo Cars business.
Following completion of the sale, Ford will continue to supply Volvo Cars with, for differing
periods, powertrains, stampings and other vehicle components.
As part of the sale, Ford also has committed to provide engineering support, information technology,
access to tooling for common components, and other selected services for a transition period to ensure
a smooth separation process.
Ford and Geely have established agreements to govern the use of intellectual property; these
agreements will allow both Volvo and Ford to deliver their business plans and provide appropriate
safeguards against misuse. These agreements will allow Volvo Cars to grant sublicenses to certain
portions of Ford’s intellectual property used by Volvo Cars to third parties, including Geely.
“The Volvo team has done an exceptional job of restructuring its business and remaining focused
on delivering its plan during the sale process,” said Lewis Booth, Ford’s chief financial officer.
“With Ford’s continued investment in Volvo, it has launched its best-ever product range and remained
true to its core values – safety, quality, environmental responsibility and modern Scandinavian design.
“We look forward to continuing to work with Volvo Cars, and wish the management team, employees and
new owners every success for the future.”
“Zhejiang Geely would like to pay tribute to Ford’s stewardship of the Volvo brand, and we look
forward to continued cooperation as Volvo embarks on the next stage of its evolution with Geely,” said
Li Shufu, chairman of Zhejiang Geely Holding Group Company Limited.
Stephen Odell, CEO of Volvo Cars, added, “The Volvo management team fully endorses Ford’s sale of
Volvo Cars to Geely. We believe this is the right outcome for the business, and will provide Volvo Cars
with the necessary resources, including the capital investment, to strengthen the business and to
continue to move it forward in the future.”
“Geely has been very supportive of Volvo Cars’ business plans and management team. We look forward to
building a strong relationship between Volvo Cars and Geely, and to maintaining a strong relationship with
Ford in those areas where we will continue to work together to ensure a smooth transition.”
Geely is one of China’s top ten vehicle manufacturers and also among the country’s top 500 firms.
Established as an independent firm in 1986, Geely launched its car manufacturing business in 1997
and is today a fully integrated independent automotive firm with a complete operation from design and
research and development to production, distribution and servicing. In 2005 Geely Automobile Holdings
Limited was listed on the Hong Kong Stock Exchange and is responsible for the majority of Geely’s
Over the past ten years, Geely has grown faster than any other company in the Chinese automotive
industry. The rapid growth has been built on careful planning and innovation. Geely’s independent R&D in
vehicles, engines, transmissions and hybrid technologies had meant that the firm is the only Chinese car
manufacturer to have developed its own range of engines – including eight series of engines between 1
litre and 1.8 litres supporting both manual and automatic transmissions – plus other valuable
Geely's development teams have enabled the firm to launch a major product offensive over the past few
years with a range of cars and features designed to meeting key customer needs. This has been backed up
with a comprehensive dealer roll-out programme, international expansion, technological innovation, and
strong management commitment.
Geely is headquartered in Hangzhou, the capital of Zhejiang province, and operates six car assembly and
powertrain manufacturing plants in China that are located in Lanzhou (Gansu province), Linhai (Zhejiang
province), Luqiao (Zhejiang province), Ningbo (Zhejiang province), Shanghai and Xiangtan (Hunan province).
These facilities enable a production capacity of approximately 300,000 cars per year.