New car news

29 March 2010 - 14:00

Volvo sold to Chinese

You're probably not wearing a stitch of clothing that wasn't made in China. Same goes for your mobile and computer, too. So we shouldn't be at all surprised that a Chinese company today bought one of the most established car firms, Volvo.

Geely, among China's fastest growing domestic car makers, has agreed to pay US$1.8 billion ($2bn) for Volvo from Ford. So Ford has taken a bit of a hit - this is only a quarter of the money Ford paid for Volvo 11 years ago.

However enterprising Geely is, it's hardly in Volvo's league for car engineering, quality and safety. To rebut the fear that the Swedish cars will be watered down, Geely has said that Volvo will be run as a separate company with separate day-to-day management. And for the time being it will continue to buy engines and technologies from Ford.

But in order for Volvo to get the economies of scale it will need outside the Ford empire, in a few years' time some Volvos will be built in China to serve the rapidly growing market there.

In those 11 years of ownership, Ford never really managed to make money from Volvo. Remember, it also owned Jaguar, Land Rover and Aston Martin, and has sold the lot of them now. Ford's upmarket multi-brand strategy is history.

Instead Ford wants to concentrate all its efforts on the blue-oval cars. It seems to be working, too. Ford is making better cars than ever. Its image, especially in the US, is stronger than it has been for years. And it's actually turning a profit all around the world.

Paul Horrell, Consultant Editor of TopGear magazine