Well, after Jaguar going east to India, it looks like Volvo could be heading east as well, but this time to China, as it’s likely a Chinese company could be the next to gobble up a prestigious European brand as Volvo’s owner Ford Motor Company, seem to have agreed a deal with a Chinese company called “Geely”
Ford’s move into the so called up market sector which once included prestigious European marques such as Aston Martin, Jaguar, Land Rover and Volvo was considered to be a trailblazing move that would put Ford firmly premium vehicle sector against the obvious German so called “posh” brands, however it seems the trail they blazed has gone cold and Ford have spent the last few years trying to unload these brands, but in the process, do all they could to make sure that the new owners were still reliant on Ford technology to build the cars.
The deal announced between Ford and Geely is being referred to as a ‘definitive agreement’ and its aimed for it to be completed before the end of this year and assuming it does get completed further highlights the global approach that China’s automotive industry is taking, as they clearly see their market as international rather than just domestic.
I don’t know how I would feel however, if I worked at Volvo’s Gothenburg headquarters or perhaps in one of the Belgian factories, for despite Geely saying they want to recognise the core values of the Volvo product and stating that manufacturing activity will be retained in Sweden and Belgium, you have to wonder, if once the new owners have their feet under the table that the tooling and manufacturing might be heading east, along with the intellectual property which it seems is already on its way. Please don’t think I am being sceptical here, but the Kraft buyout of Cadbury is still fresh in everyone’s mind where during the buyout, Kraft confirmed they would keep the UK Somerdale factory open, yet within days of completing the purchased, announced it would be closed. I guess the lesson is that if you work for a company, that’s what you do, you work for it and it’s them, not you who calls the tune and on that basis, you’ve got to be prepared for anything, irrespective of what they say.
All that said, it’s in no ones interest for Volvo to be other than a success and clearly Ford will do well out of being the main technology provider for the new owners, but it has to be said that the prestige or premium sector is a tough place, world over and its pretty much dominated by the major German brands, so it must be tough for smaller players such as Saab and Volvo, who don’t have much money to compete, so they need to offer something different, perhaps going down the heritage or retro route, for if you just look at the badge, its clear that companies like Volvo and Saab, don’t have the same car park prestige of say Audi, Mercedes or BMW.
The Volvo brand has been synonymous with innovations in safety and reliability, but you wonder if that’s enough, as pretty much all premium cars are now bristling with safety features and are reliable, so Volvo’s historic advantages, really don’t differentiate them from anything else. You’ve also got to look at image and Volvo is more ‘pipe and slippers’ than ‘sushi and spritzer’ however cars like the C30 are leading the brand towards a younger market and maybe that’s the most important direction they should go in, to attract new blood to the brand.
The deal with Geely has got the approval of the Chinese government and Ford say the deal should be complete by the end of the third quarter of 2010 and we hope for everyone concerned it goes easier than the Saab sell off which attracted interest from a number of potential buyers, including super car manufacturer Koenigsegg, but in the end never got completed. I think it’s different here, Ford are committed to disposing of Volvo, so it will happen at some point and we hope this deal goes through, as it seems Geely would be a good partner and because of their international aspirations, they wouldn’t do anything to damage the brand, but instead, build on it with new enthusiasm and drive it forward, as it’s a great brand and it would be sad to see it just fade away..