SHANGHAI -- Geely Automobile Group has no intention of acquiring Volvo Car Corp., says Geely spokesman Wang Ziliang.
Wang was responding to widespread reports that Geely, a small but ambitious private automaker, was in talks to buy Volvo from Ford Motor Co.
An investment banking source here with direct knowledge of Geely says the automaker explored buying Volvo in 2007 and 2008 but lacked sufficient capital.
Many rumors and published reports have circulated in recent months that Chinese automakers are keen to buy foreign brands. But major acquisitions are unlikely, sources say, because the Chinese automakers are small and lack experienced engineering staffs. They also lack global business experience and are struggling to develop their own brands in the dynamic Chinese market.
In December, Ford said it will consider selling Volvo as it explores strategic options for the company.
Steve Odell, installed as Volvo CEO in October, said at the Geneva auto show: My only request to Ford is that the process happen quickly. Whatever the decision, be it change of owner or to keep, we need to decide quickly because it is disruptive.
Meanwhile, Chinas influential government is discouraging foreign acquisitions. The policy does not apply directly to private companies such as Geely. But nearly all companies in China pay close attention to government policy.
At a press conference Monday in Beijing, an official with Chinas powerful National Development and Reform Commission warned domestic automakers not to acquire struggling foreign brands.
The ability of Chinese automakers to operate large companies outside China is still inadequate, said Chen Bin, head of the commissions industry coordination department, according to official Chinese media.
The commission is the countrys highest economic planning agency. In China, a state-owned company needs the commissions approval before completing an overseas merger or acquisition.
In 2008, Geely sold 221,151 vehicles in China, according to JATO Dynamics.
John Zeng, a Shanghai-based analyst with Global Insight, is skeptical of Geelys ability to finance an acquisition of Volvo.
Ford bought Volvo for more than $6.4 billion [in 1999]. But Geely is still a small company, and it simply doesnt have that kind of money to acquire it from Ford, Zeng says.
Geely reported a profit of $33.1 million in the first half of 2008.
Says Zeng: My estimate is its profit in the second half of last year would be less than the first half.
Kevin Huang in Guangzhou and Rick Johnson in Geneva contributed to this report