Ford’s sale of Volvo: Complete. Geely’s cost: $1.8 Billion

Well, it’s finally happened – Ford completed the sale of Volvo to Geely, the Chinese automaker.  Geely forked over 1.8 billion, according to a press release by Ford.  Most of it was in cash, but there was also a $200 million “note” involved.

Under the agreements of the sale, Ford will be sharing with Geely tooling, intellectual property, stampings and other car-related materials, as well as engineering support, for differing amounts of time.  This gives Geely’s employees a transitional period of help, and I’m sure it also works out to Ford’s advantage, letting them keep an eye on Geely while they have access to Ford’s inner sanctum.

The sale of Volvo lets Ford focus on their core brands of Ford and Lincoln, not to mention their professional relationship with Mazda.  The downside of this is that Ford has been using Volvo’s hardware for years to boost its own products.  Volvo-sourced drivetrains and platforms are currently underpinning the Lincoln MKS, MKX and MKT, as well as the Ford Taurus, Edge and Flex.

Of course, this is forgetting Ford’s current quality and technology push, both of which have garnered the automaker high praise in the last 12-18 months.  I’d look for Ford to develop some new platforms to go underneath new sheetmetal when its vehicles are refreshed over the next several years, pulling away from the Volvo stuff and going with new and better setups.

Meanwhile, good luck to Volvo and its new owners, as the niche automaker has only sold 28,206 vehicles from January to June this year.  I project Volvo’s sales to be around 56,400 for 2010, if their current monthly sales continue as-is.

by John Suit

Source: Ford


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