Howdy, Stranger!

It looks like you're new here. If you want to get involved, click one of these buttons!





What about Volvo's future?

17891012

Comments

  • nippononlynippononly SF Bay AreaPosts: 12,669
    Ford lost more than $4.5 billion on the purchase of Volvo, which it fully acquired in 1999.

    Geely has indicated that it wants to maintain Volvo's production in Sweden, where the labor leader on Volvo's board said he likes what he hears of the sale.

    Of course, that is what they would say NOW....might be a different story once the acquisition is complete.

    http://www.autonews.com/apps/pbcs.dll/article?AID=/20091223/COPY01/312239976/113- 1#

    It's interesting the way this article is written, they almost make it seem like Volvo will be the automaker that teaches the Chinese how to be a full-fledged global automaking force.

    The agreement, which Ford said it expected to sign in the first quarter and close in the second quarter, would be the largest acquisition of a Western auto brand by a Chinese company.

    It comes at the end of a year that may see China overtake the United States as the world's biggest auto market, a feat that would have been unthinkable only a few years ago.

    .....Chinese automakers have been short on the know-how to make quality cars, although they have been making rapid advances, and have sought the technology and intellectual property to improve their product lineups.


    I guess they could have a worse teacher. It seems clear that China is going to replace North America as the center of the automaking universe within a decade or two.

    2013 Civic SI, 2009 Outback Sport 5-spd (stick)

  • Summary

    In The Path to Globalization of China's Automotive Industry (GLG News May 18, 2009), I described the motivation and steps to be taken for China's automotive companies to go global. The recent move by Zhejiang Geely Automotive Group to acquire Volvo from Ford represents the most ambitious move to date for a Chinese vehicle manufacturer to accelerate the process of transforming into a global automotive player.
    Analysis

    By selling the Volvo car brand, Ford had taken a major step of shedding ifs portfolio of loss-making brands that previously comprised its Premier Automotive Group. In doing so, Ford realizes its objective of sharpening its focus down to its core mass-market brands. This represents a clear and sound strategy for Ford to focus its management attention and investments in the area of the business is understands best. But how does this deal benefit Volvo and its new suitor, Geely?

    Rationale for the Acquisition of Volvo

    The roots of the deal require understanding of the way Geely's Chairman Li Shufu views the auto business. Founded in 1986, as a manufacturer of refrigerators, Geely in the early 1990's expanded into motorcycle parts and eventually motorcycles and scooters. After rapidly expanding volume and scale, Geely began producing automobiles in 1998.

    Admittedly, Chairman Li’s initial view of automobiles was quite simplistic. His initially view of a car was essentially “a sofa with 4 wheels”. However, Li has quickly become an expert in the car business and increasingly demonstrates an understanding of what needs to be done to become a competitive car company. He has already become quite critical of his initial understanding of the complexities of the automobile and the complex ingredients behind building global brands.

    Specifically, Li recognizes the importance of technology and the capability of developing technology to an automotive company. He also has grown in his appreciation for how multi-national companies must be capable of self-development of technologies of the products they sell.

    China and its car companies believe that the country which produces and consumes the most automobiles must be competitive on the world stage. However, leaders like Li Shufu understand that selling cars in China is not the same as in developed countries. Selling affordably-priced cars to the vast number of entry-level Chinese consumers is a significant step away from the goal of selling Chinese-branded cars to experienced consumers in mature markets.

    Geely's acquisition of Volvo is intended to accelerate the process of achieving this goal.

    Geely’s Approach to Integration:

    The industrial revolution started late in China, and is happening on a much shorter time schedule. Chinese companies are trying to achieve what took many decades for Japanese and Korean companies in a much shorter time frame. Geely will take the approach of “standing next to companies and learning from them”. They must find companies to associate with and transfer knowledge from them. Their recent partnership with Manganese Bronze to produce London Taxi parts and vehicles, along with the acquisition of Australian gearbox maker Drivetrain Systems International were examples of this approach.

    However, just taking pieces is not sufficient. The approach Geely is taking in the acquisition of Volvo is to study the entire ”business system” and integrate this into Geely's global strategy.

    Geely is based in Zhejiang province, which is a haven for export-oriented companies. Chairman Li is adapting this mindset to into Geely’s strategy: a fundamental belief that a viable business must eventually become global and achieve the capability to sell its products around the world.

    Geely's approach can be summarized:

    1. Learn the Volvo “business system” and get in the global game
    2. Use this opportunity to promote the corporate Geely name world-wide
    3. Learn to manage a high-end car brand: essential skills for to become a global car company.

    Geely describes itself as the “poor boy from the country”, while Volvo is the “rich girl from the city”. Geely believed that for the marriage to be successful, certain commitments must be made. Geely therefore strives to preserve Volvo's:

    1. Brand Equity
    2. Culture
    3. Manufacturing and R&D in Europe (to preserve "European-ness")
    4. Relationships with Suppliers and Distributors
    5. Management Team (use Volvo management to run Volvo, similar in approach to Hong Kong integration: “One Country, Two Systems”
    6. Relationship with Labor Union


    Strategic Fit

    While the viability of Volvo’s global business may be challenging in the near-term, Geely believes:

    1. Volvo is a small percentage of Ford’s overall business, and is not core to Ford’s global strategy. Volvo is simply not a priority to Ford.
    2. In contrast, Volvo WILL BE core to Geely’s global strategy and will be therefore more highly valued.
    3. Ford has not placed sufficient emphasis on Volvo in the emerging growth markets – especially China.

    Volvo today suffers from a lack of scale across their product portfolio. Volumes are evenly distributed across the portfolio, which creates a cost structure disadvantage versus other global players. By having a number of low-volume products burdens Volvo with high investment with limited scale, which is problematic for a brand trying to compete internationally.

    Geely believes there is SIGNIFICANT upside potential for Volvo in the China market. Simply put, it is believed that If BMW and Mercedes-Benz can sell over 50,000 cars and Audi can sell over 100,000 cars, then Volvo has the opportunity to grow significantly as a European luxury brand in China. To achieve this, Volvo must be understood in China as a European brand, not just a Scandinavian brand.

    There will be very little conflict with Geely’s brands, therefore very little brand tension among the parents. In addition, Ford very likely did not leverage low-cost global sourcing to achieve a more competitive cost structure for Volvo. Geely will seek to achieve sourcing efficiencies and cost benefits through further localization in China.

    Geely will likely use Volvo to challenge Audi’s position as the “government official’s car”
    While Volvo and Geely should have their own strategies as well as management, business processes (such as Sourcing and Product Development) can be shared, however technology sharing will likely require legal/IP clearance. The partners will also need to align key Volvo and Geely strategies including how to address New Energy/Low Carbon initiatives.

    While marrying Volvo appears to be quite ambitious for "poor boy" that has only a little more than a decade of automotive experience, the industrial logic appears to be quite pragmatic and sound. With the proper attention to the process of post-acquisition integration, Geely can indeed use the Volvo to accelerate th
  • berriberri Posts: 4,007
    Geely may get some more modern technology from Volvo, but Volvo vehicles have been sort of OBE for awhile now. I don't see Volvo cars getting the cachet of a BMW in China any time soon either. Volvo no longer has the safety edge to itself and its cars seem somewhat mediocre for the price.
  • nippononlynippononly SF Bay AreaPosts: 12,669
    Sell Geelys? Volvo dealers ponder possibility

    Volvo dealers don't know whether a sale of the brand to China's Zhejiang Geely Holding Group means they'll get an opportunity to sell inexpensive Chinese cars in the United States.

    But it "sounds appealing," says Mark O'Steen, owner of O'Steen Volvo in Jacksonville, Fla. "I'll try anything. It is just another niche that we don't cover, and hopefully they do have some potential in the United States."

    On Dec. 23, Ford Motor Co. said it expected to close a deal to sell its Volvo unit to Geely in the second quarter. Like other Chinese brands, Geely eventually wants to sell cars in the United States. To do that, it needs a distribution channel, which the Swedish brand could provide.


    http://www.autonews.com/apps/pbcs.dll/article?AID=/20100104/RETAIL07/301049943/1- - 078#

    Well, that would certainly add an air of exclusivity to Volvo dealerships, with those Geelys all over the front lot...:-P

    I guess I didn't realize just how desperate those Volvo dealers are after a couple of very lean years.....

    2013 Civic SI, 2009 Outback Sport 5-spd (stick)

  • fintailfintail Posts: 32,917
    That would be amusing...my local Volvo dealer also sells MB, Porsche, and Audi. I suspect they'd be dropping the Volvo franchise if they had to sell those things. Although it might make good copycar comparisons if Geely has another fake C-class.
  • Stever@EdmundsStever@Edmunds YooperlandPosts: 38,985
    edited April 2011
    "Volvo, another brand sold off by Ford, is also pushing to build scale, in part by expanding in China, the home market of its new parent, Zhejiang Geely Holding Group Co. Last year, its global sales rose 11% to 373,525 cars, though they slipped 12% in the U.S., Volvo's biggest market."

    Cast-Off Car Brands Find a Road Back (Wall Street Journal)
  • stickguystickguy Posts: 13,589
    March was a big month. Sales up 20%+ over a year prior, and YTD about 11%. Not that they didn't have plenty of room to improve!

    the S60 is doing very well, and the XC60 is also building steam.

    2013 Acura RDX (wife's), 2007 Volvo S40 (when daughter lets me see it), 2000 Acura TL (formerly son's, now mine again), and new Jetta SE (son's first new car on his own dime!)

  • sigi1sigi1 Posts: 3
    Isn't Volvo still a great player?
    I think this development will go on.
  • anythngbutgmanythngbutgm Posts: 4,159
    link title

    Volvo has posted a solid first quarter, with earnings jumping to $103 million. That's nearly double the Q1, 2010 totals, in part due to continued strong demand for its XC60 crossover.

    I was a bit miffed that they got sold off to Geely but it seems they are being allowed to operate as usual. Still one of the cleanest, most environmentally friendly, efficient and ecologically friendly plants I've ever been to. They also have the best overseas delivery programs out there.
  • Stever@EdmundsStever@Edmunds YooperlandPosts: 38,985
    "One central area of contention: Mr. Jacoby wants to focus on safety and fuel-efficiency with smaller cars, while Mr. Li believes Volvo must expand aggressively into luxury cars to compete with BMW, Mercedes and Audi. In China, the world's biggest car market, legions of newly rich consumers are snapping up fancy sedans at a dizzying pace.

    "Volvo and Mr. Jacoby can take the moral high ground and stick with the company's tradition of understated, more modest style," Mr. Li said in a March interview, but the brand has no future in China unless it caters to flashier tastes."

    Chinese Begin Volvo Overhaul (Wall St. Journal)
  • stickguystickguy Posts: 13,589
    so stretch the S80 and bling it out, and have other models for other parts of the world.

    2013 Acura RDX (wife's), 2007 Volvo S40 (when daughter lets me see it), 2000 Acura TL (formerly son's, now mine again), and new Jetta SE (son's first new car on his own dime!)

  • Stever@EdmundsStever@Edmunds YooperlandPosts: 38,985
    edited June 2012
    "It's becoming more and more clear that if you're an automaker (particularly an automaker whose home currency isn't the U.S. dollar), and you actually want to make money on the cars you sell in the U.S., you have to build those cars in North America."

    Volvo Wants to Build Cars in North America... Maybe in a Chrysler Plant (Straightline)
  • Stever@EdmundsStever@Edmunds YooperlandPosts: 38,985
    edited September 2012
    "Swedish car maker Volvo Car Corp. on Wednesday warned that the auto boom in China appears over, as the company reported a sharp decline in operating profit for the first six months. "
    Volvo Pares Output on China Slowdown (WSJ)

    "Volvo Car Corp. will cut its workforce by 200 to 300 people at its Swedish factory in response to weak European demand, a union official said."

    Volvo Cars to Cut as Many as 300 Jobs in Sweden on Slow Demand (Bloomberg)

    US sales were up a bit over 20% over August 2011. But they are down 1% for the year to date. (carsok)
  • nippononlynippononly SF Bay AreaPosts: 12,669
    Not surprising, they sold NONE of those. But with that goes the last Volvo available with a manual shift, and the only stand-out in the entire line. :-(

    2013 Civic SI, 2009 Outback Sport 5-spd (stick)

  • Volvo is working on their safety image.. http://www.youtube.com/watch?v=aNi17YLnZpg FAIL haha
  • Stever@EdmundsStever@Edmunds YooperlandPosts: 38,985
    "Chinese-owned Volvo Car Corporation will spend about half of $11 billion of planned investment on a production upgrade in Sweden that it says will cut costs and help sales of its cars buck a market downturn.

    The plans would mark a final technological break with Ford."

    Volvo to upgrade production in Sweden (irishtimes.com)

    "If anybody thought that Volvo had the intention to move to China, I think we, with these signals, can put those ideas to rest," Mr. Samuelsson said during a news conference at Volvo's headquarters on Monday. The company currently employs 14,500 people in Sweden."

    Volvo Won't Quit Swedish Home for China (Wall St. Journal)
  • Stever@EdmundsStever@Edmunds YooperlandPosts: 38,985
    "The assembly plant in Daqing is under construction and the first pre-series cars will be built in late 2013 for training purposes. The plant is expected to be fully operational in 2014. Volvo did not say which models will be built there.

    Geely Automobile Holdings Ltd., whose Chinese parent bought Volvo Cars in 2010, will start selling vehicles jointly developed with the Swedish company in 2015, according to Bloomberg.
    "
    Volvo Revs Up Manufacturing in China
  • fintailfintail Posts: 32,917
    IMO a big part of the reason Volvo sells in the first world outside of Sweden is the Scandinavian connection. Make em in China, and they will fail here (as the Chinese criminals who buy their way in prefer German cars). Maybe will sell in China, maybe not even in other BRICs. Good luck with that.
Sign In or Register to comment.