Chinese Car Companies Shopping Swedish Brands

Posted: September 9, 2009

Bloomberg reports, "Geely Automobile Holdings Ltd., China's biggest privately owned carmaker, said its parent is involved in a possible bid for Ford Motor Co.'s Volvo Cars unit as the company seeks to boost sales overseas."

Geely Automobile Holdings' parent company, Geely Holding Group Co., "told reporters Tuesday that Geely Group is too small to acquire the Swedish car brand alone and so will likely team up with a state-owned company if it enters the bidding," says the Wall Street Journal.

Inside Line says, "Two sources close to the company estimate the size of the bid at just under $2 billion, which falls into the line with the $1.5 to 2 billion Ford is reportedly seeking." Bloomberg reports, "Ford is in talks with "a number of parties" over the planned sale of Volvo, said John Gardiner, a spokesman for Ford in Cologne, Germany, declining to identify any of the bidders." The Wall Street Journal adds, "in July, a person familiar with the situation said there were three bidders for Volvo: a group led by Geely Group, as well as Beijing Automotive Industry Holding Co. and group of investors based in Europe."

Volvo isn't the only Swedish brand with Chinese suitors. Reuters reports, "Chinese automaker FAW is set to help finance luxury sportscar maker Koenigsegg's planned purchase of Saab Automobile GM.UL, a Swedish newspaper reported on Wednesday without disclosing its sources."  In August, GM agreed to sell Saab to Koenigsegg, but details about the financing Koenigsegg would use for the deal have been unclear. According to Reuters, "FAW would provide the last part of the financing needed for the deal, daily Dagens Nyheter said. It did not say how much FAW would contribute."

The flurry of brand buying coming out of China isn't without some sound reasoning behind it. The Truth About Cars notes, "China has a booming car market, the biggest of the world. Their car exports on the other hands, of which the world is dead afraid, are a joke: China exported a trifling 190,000 vehicles in the first seven months of this year, down 58 percent from 2008." In fact, they point out, India exported more cars than China in the first half of 2009. "China is mad as hell and won't take it anymore. They do what they have to do: Buy foreign brands in earnest. Today: Saab and Volvo."

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