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December 26, 2009

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Home » Business » Auto

Geely says Volvo to remain the same

CHINA'S Geely would barely lay a finger on Ford Motor Co's Volvo if it succeeds in acquiring the Swedish luxury car brand, the firm's top executive was quoted by media as saying yesterday.

Volvo's current production, research and development facilities, union agreements and dealer networks will all be left intact, said Li Shufu, the founder and chairman of Zhejiang Geely Holding Group, the parent of Geely Auto.

"If the deal succeeds, nothing will change for Volvo, except the boss turns to Li Shufu," Li told Xinhua news agency. "Volvo and Geely will be two independently-managed brands."

Ford Motor Co said on Wednesday that it was nearing an agreement to sell its Volvo unit to Geely, China's largest private auto maker, in a deal that underscores China's arrival as a major force in the global auto industry.

The value of the deal, which Ford said it expects to sign in the first quarter and close in the second quarter of 2010, has been estimated at US$1.8 billion -- far short of the US$6.45 billion Ford paid for Volvo in 1999.

Li said that it had been "more complicated" to negotiate how to handle intellectual property rights than the deal's price.

He said the Volvo purchase would help Geely develop new energy vehicles, and that Geely would help Volvo reduce production costs and expand in the Chinese market.

"The new energy-powered vehicle will be the future of the world's auto industry," Li said.

"But based on current investment in research and development, China will be left far behind the pace of developed countries," he was quoted as saying.

China overtook the United States this year as the world's largest auto market, as sales soared after the country rolled out a series of incentives designed to stimulate consumer spending at the height of the global downturn.

However, there is still a significant technology gap between domestic Chinese auto makers and their global counterparts which has led Chinese firms to venture overseas for acquisitions of technology and designs as the global auto industry restructures.


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