Sunday, March 28, 2010

Volvo ownership moves from Ford to ... China

The Volvo Car Corporation is one of the car industry’s strongest brands, with a long and proud history of world-leading innovations. Founded in Gothenburg, Sweden, by Gustaf Larson and Assar Gabrielsson, the first car left the factory on 14 April, 1927. It was called ÖV4 (Jakob). Image Credit: egmCarTech

Volvo ownership moves from Ford to ... China

In the annals of automobile culture, nothing expresses the challenge of change more than a change in the culture of ownership of a manufacturing operation.

So when Chinese low-end mass production automobile brand, Geely purchased the Swedish premium brand Vlovo from Ford for $1.8 billion, many thought this made sense. Geely could get help migrating up the quality and auto size chain from small and cheap, to mid-sized with a premium brand added on to coordinate.

Ford sold Volvo at a time when their domestic stable brands are benefitting from American free-market loyalty ever since the Obama Administrationtook over and restructured the other two domestic brands ... retaining control over General Motors and selling off Chrysler to Italian automaker Fiat while hurting investors through a devaluation of position along the way.

The culture difference between Volvo and Ford was never able to turn a profit so one has to question if the culture divide between China and Sweeden might be a bit more tough to cross even though China can boast the largest potential market on Earth. Chinese Government support and the desire for Geely management to win where others may fail could be the key.

Understand now that when one purchases a Volvo ... they will be supporting a subset of the Chinese government as they seek to become the most powerful nation on the planet.

Has Geely and China over-reached in this cross-borders international expansion with the purchase of an internationally recognized European luxury car operation (the first of its kind by a large Chinese equipment manufacturer)?

This excerpted and edited from Financial Times -

Premium car deal fills a hole at Geely

By Patti Waldmeir, Financial Times - Published: March 29 2010 03:00 | Last updated: March 29 2010 03:00

Arthur D Little, the consultancy, has predicted that Geely would be one of only five Chinese automakers - out of more than 100 - likely to make it into the "exclusive club of global OEM champions" by 2020.
Reference Here>>

Culture integration may be the first order of business to success or failure.

... notes from The EDJE

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