Geely / Ford Ownership and profitability

[Rocinante]

I'll start by saying I don't know a lot about it and some of my assumptions may be off.

Volvo, currently owned by Geely are doing very nicely, and have been making a decent profit for a while, yet only a few years ago (well 10) they were sold by Ford as a loss making concern (partly down to the 2008 financial crisis?).

This seems a remarkable turnaround for Volvo, and seems odd that the automotive giant that is Ford, couldn't / wouldn't hold on to Volvo and enjoy the success and profits currently being enjoyed by Geely.

[Welton]

My limited knowledge of Car Manufacturer 'acquisitions' is for one company to steal the R&D from another whilst under their new ownership.

[anotherv60]

Ford retained all of the technology when they sold Volvo to Geely, That is why everyone thought they would fail like Saab. Interestingly Geely gave them £10Bn and said go at it and develop new platforms. Ever wonder why Volvo had to redesign the windscreen wipers or interior mirrors, literally everything has had to be engineered again. For the Engineers its be a fantastic boon, they also managed to recruit about 40% of the SAAB workforce to help in that task.

I think this is the main reason why Volvo have been a success, they don't have to worry if the vehicle competes with Jaguar/Landrover and are free to make their own decisions and develop their own vehicles, without having to use the Ford groups parts bin, ie enforced design parameters. Establishing their own platforms is the best thing they have done.

It will be interesting to see if this approach is continued or if Volvo will have to take parts from the Geely group (no bad thing if designed and built in sweden) but if you have to take Chinease specific parts, that might not go down to well in the west unfortunately.

[pinballdave]

I doubt that Geely will try and force Volvo to standardise on parts from their other group companies, it's far more likely that they will be sharing the Volvo designed parts and technology with their other brands.

Take one look under the bonnet and in the drivers compartment of the new London Cab (Geely also own LEVC), and see how much has come straight out of the Volvo parts bins.

[Forg]

The experience with American car companies owning operations in Australia has been that the OS arms/operations of American companies tend to run big losses. Especially if there's tax involved. So the profit heads back to HO as "licensing fees" or whatever, and the local manufacturer runs at a loss year-on-year & pays little tax, every now & again requesting more government assistance (manufacturers only run in first-world countries due to government assistance - tax breaks & the like).

Chinese industry in general, like their government (can't be voted out!), runs a massively longer game than American industry does (these days at least).