"We have made significant progress in assembling the team that will develop Volvo Cars under Geely's ownership."
Zhejiang Geely Holding Group Co., Ltd. today announced Li Shufu, its Chairman, will become Chairman of the Board at Volvo Car Corporation upon its acquisition of Volvo from Ford Motor Company.
Geely also named Hans-Olov Olsson as Vice-Chairman at Volvo Cars. Olsson is a former President and Chief Executive Officer of the Swedish automaker. Olsson was an adviser to Geely on the transaction.
How long the 68-year old Olsson will stay in the newly created position is unknown.
Nevertheless, the move is clearly an attempt to assure Swedish doubts about the sale, and ensure a smooth transition from Ford ownership when the deal closes during the third quarter of 2010. Ford will not retain any ownership in the new Chinese company.
“We have made significant progress in assembling the team that will develop Volvo Cars under Geely’s ownership. Today’s board appointments underline my personal commitment to this famous company,” Li Shufu said.
While the difference between U.S. cultural attitudes of Ford management and Swedish attitudes were significant, it is nowhere near as vast as the differences between the Chinese “middle kingdom” and “Konungariket Sverige.” Whether the Chinese can manage to make Volvo a growing and profitable global car company remains to be seen, and is the subject of great debates among industry observers.
For the moment, Volvo production in Gothenburg, Sweden and Ghent, Belgium is secure. It remains to be demonstrated that Geely can successfully build Volvo’s in China to Volvo’s quality and safety standards.
Then there is a global marketing issue – can Geely market Volvo cars and SUVs any better than Ford already did globally? Moreover, with Volvo’s standards for quality, safety and technology, it will take a very long time to cut costs by substituting Chinese parts since Chinese makers are not keeping pace with the technology development that is going on at existing global suppliers. Nonetheless, the opportunity in China is vast for the Volvo brand. It is the rest of the automotive world that is problematic.
The booming Chinese market will grow to 19 million units of annual sales by 2016, according to the experts from the global auto consultancy practice at PricewaterhouseCoopers. That would make China the largest maker and consumer of vehicles in the more than 100-year history of the business. The Chinese home market could reach 30 million units by 2020 or so, and barring a political upheaval – a genuine risk everybody acknowledges– it could grow to 40 million units by the end of that decade. (See Chinese Auto Market Grows to 40 Million Annually?)
The Geely announcements paralleled a separate disclosure by Ford Motor Company that Stephen Odell, currently CEO of Volvo Cars, will become Chairman and CEO of Ford of Europe. (See Ford’s Farley Gets Key Global Assignment)
Under the proposed sale, Volvo Cars will remain for the moment headquartered in Gothenburg, Sweden, with what’s said to be “management autonomy” to execute on its business plan.
Li Shufu added: “The dual roles of Chairman and Vice-Chairman will combine my own knowledge and network from the Chinese market with Hans-Olov Olsson’s extensive international experience from the automotive industry and Volvo Cars.”
More management and board appointments at Volvo Car Corporation, including a new Chief Executive and Chief Financial Officer, will be announced prior to the closing of the deal, Geely said in a statement.