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Ford/Geely Finally Agree on Volvo Sale

In an agreement that almost didn’t happen due to Ford’s reluctance, Chinese automaker Zhejiang Geely Holding Group will finally buy the Volvo cars unit for $1.8 billion.

Ford

According to Automotive News, this is “the country’s biggest overseas auto purchase.” They add, “The takeover underscores China’s arrival as a major force in the global auto industry and ends nearly two years of talks with Geely over Volvo — the last sale from Ford’s former premier group, which also held Aston Martin, Jaguar and Land Rover.” Ford sold Aston Martin in 2007 to a consortium of investors, and Jaguar and Land Rover in 2008 to India’s Tata Motors. After the sale, Geely will own 100 percent of the Volvo brand, including some of Volvo’s intellectual property.

 “Because of the component sharing between existing Volvo vehicles and Ford models, Ford has agreed to continue supplying powertrains, stampings and other systems to Volvo for an undisclosed transition period,” explains Autoblog. “Perhaps the most difficult aspect of this deal is the intellectual property situation. Volvo will be granted licenses to use some Ford-owned technology and will have the ability to sub-license some technology to third parties, including Geely.”

 According to Auto Week, “Volvo will maintain its manufacturing base in Sweden and Belgium, as well as its Swedish headquarters. Geely is planning for a factory in Beijing to build 300,000 Volvos for the Chinese market, Reuters reports.”

 The deal is based mostly on cash. According to the Detroit News, Geely “will pay Ford $1.6 billion in cash, and the remainder in the form of a $200 million note.” China’s largest private automaker bought Volvo for quite a bargain; Ford originally paid $6.5 billion for the brand in 1999, says Automotive News. Though the agreement has been made, the sale won’t close until the third quarter of 2010, pending regulatory approvals. The Detroit Free Press cites an even earlier date, noting “Ford expects the sale will close before Sept. 30.” The Chinese government is expected to approve the deal.

If you’re in the market for a new car, check out the U.S. News rankings of this year’s best cars as well as this month’s best car deals.  

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