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A Chinese Volvo? Please say it ain't so

Posted by Clifford Atiyeh  June 23, 2009 02:50 PM

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Reports in the Chinese media surfaced last week claiming Geely, the Shanghai-based automaker behind the deadly CK sedan, had reached an agreement with Ford to buy Volvo.

Ford and Volvo have dismissed the reports, including Geely's alleged $10 billion investment in expanding Volvo in China, and plans to build a new factory for the XC90, as "inaccurate." But they've stopped short of ruling Geely out of Volvo's unknown list of potential buyers.

Which prompted The Wall Street Journal to ask last week, "So would buying a brand with a reputation as one of the safest cars in the world buck up a Chinese buyer or tarnish Volvo?"

Neither. Volvo would be destroyed.

OK, maybe not that badly. But aligning a luxury brand that has built its entire existence around safety with a nascent automaker — one that shares its country's horrendous reputation for poorly-made, copyright-infringing cars — would be damaging to Volvo, and create the biggest oxymoron in the business. One of Geely's cars, designed to imitate the previous-generation Mercedes C-Class up front, crumples like an accordion in ordinary crash tests, just one of the reasons why Geely's website lists only Russia, Ukraine, Turkey, Nepal, Venezuela, and Chile as its "global" market.

Then there are the blunders that have burned other automakers, such as General Motors' lawsuit versus Chery (Chevy?) and the mirror-perfect Toyota Corolla made by BYD. Or the dozens of other cars that aren't ready to see European and American shores for a long, long time.

This isn't to say that foreign ownership of premium European marques can't work. Ford's early 2008 sale of Jaguar and Land Rover to Tata Motors, which conversely makes the world's cheapest car, has worked especially well for Jaguar. Last year's all-new XF sedan, and soon, a completely-revamped XJ, are part of that success. Even Land Rover's LRX concept shown at the 2008 Detroit Auto Show has been given the green light for production, and a possible hybrid. The other gem Ford shedded in 2007, Aston Martin, seems to be doing just fine with its British/Kuwaiti owners, and the nearly $2 million One-77 is almost ready for delivery.

GM Shanghai yesterday announced the sale of its two millionth Buick built by Shanghai Automotive Industry Group. Even BMW, which since 2003 has contracted Brilliance Automotive to build Chinese-specific models like the long-wheelbase 5 Series, continues to uphold its reputation as it grabs a piece of the world's fastest-growing car market.

So it can and does work. And the desperation of the American car industry means a Volvo sale is almost inevitable, despite Ford's smarter, preemptive strategy to start cutting two years ago.

When Ford bought Volvo in 1999 for nearly $6.5 billion, the Swedish car company was in dire need of bigger R&D pockets. The 10 years that followed have been the most dramatic in Volvo's 82-year history, shifting the Swedish company from its boxy, austere models to some of the industry's most original, flattering designs. The first S80, current C70 convertible, C30 hatchback, and the 2010 XC60 are prime examples of this direction, including an actual focus on performance and vehicle dynamics, two aspects Volvo ignored for decades.

Volvo sales have suffered along with the entire industry, but their situation is nothing like Saab's abusive ex-marriage with GM, which mandated the Swedish brand use aging GM platforms for its 9-3 sedan and rebadged 9-7X. The Subaru wagon-turned-Saab 9-2X was a flop, and Saab still hasn't received an update to its 10-year-old 9-5 sedan.

Instead, Volvo developed its own platforms that Ford has happily lapped up. The first Ford Five Hundred was based on the former S80, the current Taurus and Lincoln MKS share the new S80, and the Pininfarina-designed Europe-only Focus Coupe-Cabriolet shares its guts with the S40 and C70 (and Mazda 3). Even the Land Rover LR2 and its inline-six are Volvo-sourced.

But if Volvo is sold to any Chinese automaker, Gothenburg had better state why it will land in better hands than Ford, which knows a lot more about building quality, safe cars than anyone at Geely. Besides opening up to the Chinese luxury market, a sale to Geely doesn't seem to offer any advantage for Volvo's tried-and-true sales regions — unless there's a lot of money on the negotiating table.

This blog is not written or edited by Boston.com or the Boston Globe.
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17 comments so far...
  1. The S80 and C30 are the only Volvo's in my opinion that have tried to look good. The rest are still an evolution of the boxes they had in the past.

    Hopefully the new owners with get rid of that 'sash'-looking grill piece they all have. The grill openings are shaped nicely but the horizontal brand badging ruins the look.

    And what's up with the male symbol logo. The only other place I've seen that is worn by Austin Powers. And it doesn't work on either.

    I'll give the company a little credit for trying to break the mold but still to no avail. Safe or not, I would never buy a Volvo. At least not until they can make a coupe with supermodel looks.

    I've only found out recenlty that they are a premium brand. Really?!


    Posted by Andy June 24, 09 10:10 AM
  1. My choice of automobiles is quickly disintegrating before me. I will not buy a government-run-state-controlled-Obama_mandated automobiles, so that leaves out GM and Chrysler. If Ford sells to a Chinese company, my beloved S80 will be my first and last.
    The Chinese way of doing business is unscrupulous to say the least. Their quality is shoddy and they respect the intellectual property of no one. I rather walk than ride in any car they build.
    Check out how well they build their trucks on this youtube video: http://www.youtube.com/watch?v=D827IxEJVS4
    and then tell me you want to purchase one of their automobiles.

    Posted by HalleyBooth June 24, 09 10:37 AM
  1. Wouldn't it be really sad for Volvo to be acquired by a company that really needs a car company? Volvo has had value to Ford only as a skunkworks. That wasn't the grand plan and it's definitely does not justify hanging on to a mass-market car company.

    Posted by Barry June 24, 09 11:23 AM
  1. Are you kidding, Andy? What grade are you in? Volvos have worn that badge symbol and sash since the late 20s. And the symbol is the sign for Mercury or represents iron. They should remove it because you can't get past your childish affinity to Austin Powers? "Coupe with supermodel looks". This brand is not Ferrari, kid.

    Posted by Number2 June 24, 09 11:32 AM
  1. Number2, car brand logos have evolved over the years. I'm sure Volvo could use a hot change.

    Beyond being extremely safe, I don't understand the appeal of the Volvo vehicles.

    After doing a little research of the brand to give it the benefit of the doubt, I found what I was looking for. In the 60's and 70's Volvo had a sexy little coupe under the 1800 name. What a looker! Did the designer suddenly pass away or something? There hasn't been anything as alluring in the lineup since then.

    I figured the symbol had to mean more than just male. As a sidenote, why do you suppose Mercury did not use the symbol, Volvo come first? But now it makes sense. Iron. You are a wise old owl Number2.

    China Volvo, please bring back the Volvo 1800 sports coupe!

    Posted by Andy June 24, 09 12:06 PM
  1. The Central Planning & Purchasing Power of Communist CHINA…

    Ø Has allowed them to Walk their Cart down the Aisles of the WORLD purchasing > Oil, Minerals, Water Rights, Human Resources, National Icon Companies etc > At distressed Prices caused by Free Market Conditions without regard for Environmental, Human Rights or Moral violations.

    Even if distressed Prices are not applicable .. their Consolidated Purchasing Power allows them to pay more than any Free Market Bid.

    Soon > The Free Market World will Wake UP and find that the World Economies > Critical / Limited World Resources have been Staked Out / Purchased / Controlled by the Chinese…. With the rest of us left to > Eat the ( or their ) Crumbs.

    Communism has No Conscious and is not encumbered by Morals, Intellectual or Human Rights > Are Free Market / Free Nations handicapped by our Morals ?

    Posted by Stephen June 24, 09 12:35 PM
  1. CApitAlizE at RandOM. the NEW WAY of spelling. GRAMMAR be DAMNED too. SpellINg COUNTS only when a GRADE IS GIVEN.

    P.S. I suspect Volvo sales in the USA - the largest market for Volvo I think - will crash when purchased by a low-ball Chinese company.

    Have a nice day. :)

    Posted by TexLeeger June 24, 09 04:16 PM
  1. Why not? We're going to have Chinese MGs and Humvees. The only problem is after you buy one of these, an hour later you have to buy another one!

    Posted by Liz54 June 24, 09 04:58 PM
  1. VOLVO to China?
    Ford is more interested in "preserving" the family business and the wealth that goes with it then protecting a venerable car brand and the jobs that support it. Disgusting. More disgusting: the Swedish government that would tolerate this.

    Posted by Jasper June 25, 09 06:49 AM
  1. When Ford bought volvo the quality went way downhill.
    Sure, not everyone is a fan of volvo's but they did what they did well.
    They were safe and they lasted. They drove better than the VW and were way ahead of most any care made in the US in terms of quality. In a sea of plymouth K cars, poorly made vw jetta's and the grandfather's buick....volvo was offering something desirable.
    The hayday ended when the US market finally got on the wagon and started making safety a priority. Thus, came the merge with Ford. Volvo could have brought Ford up but instead Ford started to bring volvo down. after joining up with Ford,


    Posted by lst June 25, 09 07:17 AM
  1. Oh please, no, Ford - do not do this to Volvo...
    Volvo has great vehicles - they are beloved, and not for everyone, and they should not be marketed as a "premium" brand within a big line-up, like Ford did... witness the kid in post #1 deriding that notion. Here's why:

    1. loyal Volvo-buying people who think of Volvos as safe, sensible, desirable cars to buy are "intelligent mainstream" people who are looking for something just a little different, but ultimately are buying a "real" daily driver... this is not a luxury purchase for them, so you can not try to compete with Audi, BMW, Lexus...
    2. people who don't like Volvos because they think they're boring do not get it, and the only way you'll change their mind and entice new buyers is to promote Volvo as a mainstream-different choice, not a premium-different one... in other words, have models marketed to compete with sub-$35,000 cars, not to fare poorly against luxury stuff.

    Posted by jchristian June 25, 09 10:23 AM
  1. Yo Andy, calm down. The symbol being debated was not for Mercury, the division of Ford, but rather the god. In fact, the symbol is for the god, Mars, and refers to iron or strength. That's the marketing message. Perhaps you should put down the xbox and read a few more books.

    Posted by alex June 25, 09 01:58 PM
  1. Saab needs to do something about the 9-5, and soon. What is the point in buying a new 9-5 when you can buy a nearly identical 10-year old model for a small fraction of the price? Well-maintained older cars with good maintenance are almost as reliable as new ones. esp. considering the price difference.

    Posted by Fran Taylor June 25, 09 08:32 PM
  1. Volvo has a demographic, just like any other car or brand. I drive a 9 year-old V70 T5. It goes well, is very reliabl, carries 7 and gets better mileage than any SUV. Fine. Some people like Camrys., others like Camaros. That's what a free market supports. China is not a free market, does not play by the rules that we play by, and I cannot imagine replacing my Volvo with a Geely.

    Posted by knightrider June 25, 09 10:17 PM
  1. Volvo's big problem now is poor quality. Sales are in the toilet. Volvo coasts along on a fading prestige of ownership (Volvo has always been an aspirational brand with the middle classes) and the loyalty of previous owners. Sale to a Chinese company will eviscerate the prestige factor regardless of product quality. The upper middle classes (and those who would like to be) love to buy European cars. Once the cachet of "European" is removed, you mine as well buy a Lexus, which is the same cost and prestige, but infinitely more reliable.

    Posted by Anonymous June 26, 09 11:04 AM
  1. Another place Volvo erred. Back in, say, 1988, a basic Volvo sedan cost about 20% more than a more mainstream car like the Toyota Camry or a Chevy Malibu. Now a basic Volvo cost about 45% more than the above mentioned vehicles. Volvo, aspirational brand, priced themselves up up and away from those who aspired...

    Posted by Anonymous June 26, 09 11:14 AM
  1. YARRRRRRGHG

    Posted by Anonymous June 28, 09 09:41 AM
 

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