There's a perception, rightly or wrongly, that Chinese car makers have a long way to go achieving passive safety parity with car makers from other parts of the globe. That being the case -- and looking forward to export-funded prosperity as the Chinese manufacturers are -- would it not make sense to buy in that sort of crash-safety expertise?
It's possibly that logic that's driving Chery's plans to acquire Volvo from current owner, Ford. This news was previously reported by us (more here) just last month, but the mystery 'buyer' has now been revealed as Chery, in an article published in Forbes, the well known American business publication.
Ford has gone on record saying that it will not be selling Volvo any time soon, but presumably, for the right sort of money Dearborn would offload the struggling Swede in a moment.
The operative words there are "for the right sort of money". According to the report in Forbes, that amount is US$4.4 billion. Forbes cites information from a Chinese magazine, to the effect that Chery is embarked on a feasibility study -- as yet in the very early stages -- and is seeking support from local banks and private equity firms.
The Chinese manufacturer is owned by the City of Wuhu, in Anhui province, but it's believed that Chery is yet to tender any proposal for the acquisition of Volvo to its owner. Information concerning the feasibility study leaked out, according to Forbes, from some of the potential financiers approached for funding.
If Chery can raise the funds -- and if Ford is willing to offload Volvo -- the acquisition will cost the Chinese company slightly more than its current worth, including accumulated debt.
An analyst, Zhang Xin, was quoted in the Forbes article speculating that the deal would be unlikely to succeed, simply for reasons of the immense cost incurred, but also because Ford's joint venture in China, the Changan Ford Automobile Company, is planning to build the Volvo S40 in China. Furthermore, according to Zhang, Chery is already committed to producing vehicles for Chrysler in the USA.
So the word on the ground from a local market expert is that the sale of Volvo won't happen, but rumours persist that Ford is quietly looking for a suitor, writes Forbes. It wouldn't surprise if another Chinese brand made Ford an offer it can't refuse, for the reason mentioned at the beginning of the article.
Despite Volvo's current financial quandary, it remains one of the acknowledged experts in crash safety -- and that's the sort of expertise which isn't cheaply bought. So even at US$4.4 billion, a transfer of ownership from Ford may well be tempting for a car company with a lot of ground to make up in that area of research.
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