Chinese auto makers buy another American brand.
Ford announced today that it reached “a definitive sale agreement will be signed in the first quarter of 2010, subject to appropriate regulatory approvals" for Geely, one of China’s largest car makers, to purchase Volvo.
There are still several obstacles to overcome such as government approval, financial and final documentation in order to officially close the deal. Ford placed Volvo up for sale last December while trimming the fat on their fiscal spending in order to survive without accepting any bailouts. Swedish media reports that purchase price will be for $2 billion dollars, a third less then what Ford paid for Volvo in 1999.
Volvo’s future is not certain with Geely managing the Swedish icon without taking on the Chinese image. It is also still unclear how Geely can turn a profit on this auto maker despite the higher sales recently on the 82 year old company that have kept earnings low. China has become the largest car market in the world since the economic crisis affected U.S. sales. Ford said that the deal would allow Geely “to further strengthen the business and build its global franchise.”