Ford Motor Co. has announced it has reached a final agreement to sell its Swedish Volvo brand to China’s Geely Holding Group. The sale price is set at $1.8 billion, a fraction of the $6.5 billion Ford paid to buy Volvo back in 1999. The sale of the Volvo brand completes Ford’s corporate strategy to sell-off all its luxurious European brands. In 2008 Ford sold the Jaguar and Land Rover brands to India’s Tata Motors for $2.3 billion, while in 2007 the divestiture began with the sale of Aston Martin for just under one billion. These strategic moves are partially to credit for Ford’s ability to stave off bankruptcy during the recent recession.
“Volvo is a great brand with an excellent product lineup. This agreement provides a solid foundation for Volvo to continue to build its business under Geely’s ownership,” said Ford president and CEO Alan Mulally. “At the same time, the sale of Volvo will allow us to further sharpen our focus on building the Ford brand around the world and continue to deliver on our One Ford plan serving our customers with the very best cars and trucks in the world.”
Li Shufu, chairman of Zhejiang Geely Holding Group Company Limited, commented in a statement that, “Zhejiang Geely would like to pay tribute to Ford’s stewardship of the Volvo brand, and we look forward to continued cooperation as Volvo embarks on the next stage of its evolution with Geely.”
For its part Ford will continue to provide Volvo with certain components (including powertrains) for a limited time, although it will retain no part of the Volvo Cars company. Ford has also agreed to provide support in the form of engineering, tooling and information technology. Both Ford and Volvo have agreed to certain rules regarding intellectual property. The deal is subject to regulatory approval.
“The Volvo management team fully endorses Ford’s sale of Volvo Cars to Geely. said Stephen Odell, CEO of Volvo Cars. “We believe this is the right outcome for the business, and will provide Volvo Cars with the necessary resources, including the capital investment, to strengthen the business and to continue to move it forward in the future.”
Official release after the jump: