Chinese Automaker Geely Reportedly Eyeing Volvo

It’s a sale to end all sales with the biggest name brands in the business up for grabs! Yes, it sounds like an ad for a “Boxing Week Blowout” but in reality it’s the state of our automotive industry.

Brands will most certainly change hands over the course of the next few months. It’s just the matter of which buyers will walk home with the best deals that’s left to sort out, and with Ford having already relinquished its Jaguar/Land Rover luxury marques to India’s Tata Motors earlier this year, and Aston Martin to a consortium of Middle Eastern buyers fronted by David Richards’ Prodrive some time before that, all that’s left is to sign away Volvo to a Chinese entity to prove that the blue oval is truly a global mover and shaker.

China’s SAIC has reportedly been interested in the Swedish brand since Ford put it up for sale at about $6 billion USD, but the price might prove too rich considering the buyers’ market we’re in. After all, GM’s market cap is only around the $2.5 billion mark while all of Chrysler, including Jeep has an estimated market cap-based value of around $750 million (Chrysler is private so we have to estimate). Of course, Volvo would come without the proverbial albatross around its neck (or flock of albatrosses) and its brand recognition is extremely strong in entry-level luxury segments around the world, which is probably why Chinese automaker Geely is being bantered about as a possible buyer.

Geely might just be the strongest candidate, with reports from Britain’s Autocar magazine stating that officials from the company have already traveled to Volvo’s headquarters in Gothenburg, Sweden to talk about a possible sale.

While the opportunity looks ripe for Geely, there may be a couple of speed bumps for it or any other suitor to overcome before wedding bells are heard. The problem lies in that Ford hangs much of its global product portfolio on Volvo chassis architecture, and vice versa in a few cases, and so that it doesn’t give away intellectual property rights with the brand, the new buyer has to be able to deliver future Volvos with state of the art mechanicals. Yes, it doesn’t exactly sound like Geely’s forte, but consider that Volvo isn’t exactly hitting the market with anything revolutionary and that Geely shouldn’t be judged by the cars it currently builds, as they’re designed for sale in a country with few safety standard and one that is just starting to appreciate motoring on a grand scale, not necessarily grand motoring.

Another point worth consideration revolves around North America being the prime objective for Chinese automakers, being that their brands are already selling in Europe and South America, as well as the fact that even in economic turmoil America remains the world’s largest auto market. Geely or any foreign buyer with US consumption being top priority might be better served in buying up one of General Motors’ mainstream brands, such as Pontiac or Saturn, or Chrysler and Dodge, for a much better price with greater potential market penetration.

Yes, it’s a buyers’ market that unfortunately has cash-strapped US and European automakers wishing they had managed their money better, or they wouldn’t be selling themselves off but rather investing in opportunities of a lifetime.