Who will have the most to lose if Geely fails to acquire Volvo?

Yang Jian is the managing editor of Automotive News China.
SHANGHAI -- The media-savvy spokespersons of Geely and Ford have repeatedly said the two sides are on track to clinch their deal for Volvo.

But Last week Geely's straight-talking president Li Shufu told the Wall Street Journal negotiations to buy the Swedish carmaker from Ford have hit a snag, due to unspecified problems at the American company. If the deal fails, Geely will not be to blame, he said.

Well, few would be surprised if the sale falls through. We have seen a slew of deals collapse at the last minute in the global auto sector since mid-2009.

But unlike the aborted Opel/Vauxhall deal, in which GM retained the two European brands, and the Hummer deal in which the otherwise obscure Tengzhong gained tremendous publicity, each side involved in the Volvo deal will be a clear loser if it fails.

If Ford decides to retain Volvo it risks the loss of a clear direction for its future -- the "One Ford" strategy. A brainchild of Ford's CEO Allan Mulally, the action plan is about focusing on core brands and better aligning the automaker's global resources.

Guided by this strategy, Ford sold the Land Rover and Jaguar brands to Tata in early 2008. The move replenished its cash reserves and eventually enabled it to survive the industry meltdown of 2008 without a government bailout.

For Geely, failing to acquire Volvo will mean the loss of a shortcut into the global market. It would also constitute a personal blow to its adventurous president Li Shufu, who started chasing the brand in 2002.

But the side that has the most to lose is Volvo itself.

Having Geely as its new owner would enable the Swedish brand to better explore the fast growing Chinese market, offering a prime chance to regain its past glory. If it doesn't change owners, Volvo may face the risk of being further marginalized on the global market.

Ford and Geely are supposed to sign the Volvo deal before the end of this month. There are still a few days left. Let's keep our figures crossed.

Yang Jian is the managing editor of Automotive News China.

You can reach Yang Jian at yangjian@autonewschina.com



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