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Dealers
Richard Read
A couple of weeks ago, we reported that Crown -- a consortium of American investors led by former auto industry executives -- is making a play for Volvo. The group's bid for the brand is substantially lower than that of current front-runner Geely, but we pointed out that the Americans do have some advantages at the bargaining table, especially when it comes to one of Ford's biggest concerns: intellectual property. China in general, and Geely in particular, aren't known for respecting IP rights, and as negotiations move forward, we suggested that could become a sticking point.
Apparently, it has become a sticking point.
Two sources close to the discussions between Ford and Geely say that things have come to a standstill, precisely because of IP concerns. Company representatives are meeting in London this week to continue the talks, but it appears as if the negotiations could soon be dead in the water -- as dead as Beijing Automotive Industry Holding Company's recent bid to buy Opel from GM, which failed due to similar problems. Geely's hand hasn't been helped by last week's arrests of Ford engineer Xiang Dong Yu, who's been charged with stealing thousands of documents from the company in his effort to land a job at Shanghai Automotive Industry Corporation; that's made Ford even more anxious about its IP, and heightened awareness of China as the source of such anxiety.
Although Ford hasn't commented officially on its discussions with Geely, company spokesman Mark Truby has indicated that Ford is still speaking to a variety of potential buyers. That sounds like good news for Crown -- or at least confirmation that the consortium is still in the running.
Of course, as losses at Volvo continue to shrink and the international auto market continues to recover, Ford may reconsider selling Volvo altogether. After all, Volvo is Ford's primary means of reaching higher-end buyers around the globe. As analyst Michael Robinet has said, "One option could be to keep Volvo right now because it is Ford’s only international near-premium brand.... Outside of North America, it’s just Ford and Volvo."
Hopefully we'll have a clearer picture of where things stand -- at least as far as Geely is concerned -- after this week's talks in the U.K.
2010 Volvo C30 R-Design Enlarge Photo A couple of weeks ago, we reported that Crown -- a consortium of American investors led by former auto industry executives -- is making a play for Volvo. The group's bid for the brand is substantially lower than that of current front-runner Geely, but we pointed out that the Americans do have some advantages at the bargaining table, especially when it comes to one of Ford's biggest concerns: intellectual property. China in general, and Geely in particular, aren't known for respecting IP rights, and as negotiations move forward, we suggested that could become a sticking point. Apparently, it has become a sticking point. Two sources close to the discussions between Ford and Geely say that things have come to a standstill, precisely because of IP concerns. Company representatives are meeting in London this week to continue the talks, but it appears as if the negotiations could soon be dead in the water -- as dead as Beijing Automotive Industry Holding Company's recent bid to buy Opel from GM, which failed due to similar problems. Geely's hand hasn't been helped by last week's arrests of Ford engineer Xiang Dong Yu, who's been charged with stealing thousands of documents from the company in his effort to land a job at Shanghai Automotive Industry Corporation; that's made Ford even more anxious about its IP, and heightened awareness of China as the source of such anxiety. Although Ford hasn't commented officially on its discussions with Geely, company spokesman Mark Truby has indicated that Ford is still speaking to a variety of potential buyers. That sounds like good news for Crown -- or at least confirmation that the consortium is still in the running. Of course, as losses at Volvo continue to shrink and the international auto market continues to recover, Ford may reconsider selling Volvo altogether. After all, Volvo is Ford's primary means of reaching higher-end buyers around the globe. As analyst Michael Robinet has said, "One option could be to keep Volvo right now because it is Ford’s only international near-premium brand.... Outside of North America, it’s just Ford and Volvo." Hopefully we'll have a clearer picture of where things stand -- at least as far as Geely is concerned -- after this week's talks in the U.K. [Bloomberg]
Responses (4 total)
By Tom L #1, Posted: 10/21/2009
The Volvo brand has a lot of value because consumers equate Volvo to safety. Ford had really mismanaged the brand, they should have driven the products downmarket to reach a broader base of family buyers. Look at the old 500 and Freestyle and now the Flex. Should have been Volvos. And why haven't they ever offered a minivan with a Volvo badge?
True, but I think there's something to be said with knowing your demographic and sticking to it. (Porsche is a good, cautionary example of brand creep.)
_
On the other hand, if things keep going the way they're going, Ford may get a second chance.
By Tom L #3, Posted: 10/21/2009
Hasn't Volvo crept over the last 20 years? I was a child of the 80's but I remember 20 years ago that Volvo's were safe, reliable (boring to my teenage eyes) family vehicles but weren't competing for the near-luxury market. Then in the 90's Ford bought Volvo and tried to push them up market and move away from boxy styling. So you could say that the brand crept away from its identity a while ago and that's why it's struggling.
By oldsrocket88 #4, Posted: 10/21/2009
Keep Volvo and scrap Mercury! Keep Volvo were it's at but continue to make it more mainstream. Like Ford has been doing. Growing up my parents had a Volvo wagon. It was a big ugly box. Wasn't a "near luxury" car even by '70s standards. A/C & criuse were about the only options it had.
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