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.
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