Volvo Bid: A Wreck For Geely?
If Chinese auto makers are truly poised to snap up struggling Western brands, the mooted maiden deal isn't much of a start.
Geely Holding Group is preparing to bid for Volvo, the struggling Swedish firm owned by a similarly troubled Ford Motor Co. And Geely, China's 10th-largest auto maker by sales, may find itself competing against another Chinese company.
The prospect of a bidding war for the likes of Volvo, Saab and Opel should please financially strapped sellers such as Ford. But emulating Geely's pursuit of Volvo won't necessarily be as beneficial to Chinese predators or their potential prey.
Volvo is now worth half the $6.4 billion Ford paid 10 years ago, analysts say. A hard-nosed Geely could offer half as much again. Even at $1.5 billion, Volvo is a big bite for privately owned Geely. It has little international experience, and a work force only a third as large as Volvo's; the listed Geely Automobile Holdings unit has a market capitalization of about $500 million.
Even if Geely could make the numbers add up, Volvo's no prize. It made a $1.5 billion pretax loss last year and a 26% drop in sales. Citi Investment Research says it has a $3.5 billion outstanding loan from Ford and needs substantial investment over the next five years.
Why is Geely bothering?
The upscale Volvo brand and its car-safety technology would jumpstart an image makeover for Geely, whose products have a reputation for poor quality. Shifting production to China from Sweden might reduce costs and improve the acquisition numbers. Geely Chairman Li Shufu's international ambitions would be enhanced.
A multicultural personnel integration would be difficult; Daimler's Chrysler fiasco shows how tough these projects can be. Another risk: Volvo could lose some of its high-quality, safety-first luster in the arms of a Chinese owner.
There is little positive precedent for Chinese automotive escapades overseas: South Korea's Ssanyong, bought by Shanghai Automotive in 2004, is now in receivership.
Wary of foreign acquisitions outside the favored resources sector, Beijing is probably unenthusiastic about a Geely offer. Geely itself might do well to hope an eventual bid fails.
吉利控股集团正准备提出收购在困境中挣扎的福特汽车(Ford Motor Co.)旗下同样陷入困境的瑞典公司沃尔沃(Volvo)。中国销量排名第十的吉利可能发现自己还要同另一家中国公司竞争。
即使吉利凑得出这笔钱，沃尔沃也带不来什么好处。去年沃尔沃的税前亏损高达15亿美元，销售额下降了26%。花旗投资研究(Citi Investment Research)说，沃尔沃还欠着福特汽车35亿美元未偿贷款，而且未来五年还需要大笔资金投入。