REPORT: Geely's plans to buy Volvo from Ford unravelling over intellectual property concerns?
Ford has been trying to offload the Volvo brand since December of 2008, but after years of rumors and speculation those 10 months feel more like a decade. China's Geely has been speculated as the number-one bidder for the Blue Oval's Swedish luxury brand, but a report by Bloomberg asserts that the long-awaited accord could be shelved due to concerns over Ford's intellectual property.
Because Volvo is so tightly integrated into Ford's product development, any buyer of the safety-minded car maker would have inside knowledge of the Blue Oval's future product plans and access to its latest and greatest technology. The buyer would also have direct access to Ford's vehicle architectures, since so many are shared between itself and Volvo. If Geely does in fact purchase Volvo, those platforms, which pass both European and U.S. crash test standards with flying colors, it could give China's largest automaker a better chance of entering the coveted U.S. market. And helping Chinese automakers enter the States probably isn't at the top of the list of things Ford wants to do right now.
U.S. and European automakers have had their hands full in attempting to curb China's lax intellectual property rules. Some vehicles built by Chinese automakers and sold in the land of the Great Wall are nothing more than carbon copies of vehicles from American., Japanese and European automakers... save for a new logo. Ford is also dealing with the case of Xiang Dong Yu, an ex Ford engineer who stole 4,000 sensitive and confidential documents from the Dearborn, MI-based automaker. The sticky-fingered engineer reportedly pilfered the documents in an effort to get a job at Shanghai Automotive but he was instead hired by Bejing Automotive.
The other issue Ford could be facing is the bargain-basement price tag Volvo is rumored to be offered at due to years of recessing sales volume and mounting losses. Ford purchased Volvo in 1999 for over $6 billion, but sources familiar with the brand's sale estimate that the Swedish automaker could now fetch as little as $2 billion. While that sum is nothing to sneeze at, Ford could be better off waiting until the automotive market heats back up gain. The new XC60 crossover has helped curb Volvo's sales woes here in the U.S. to the point that the Swedish Automaker realized a 16% sales climb versus last September. Next year's intro redesigned S60 coupled with several mid-cycle face lifts could continue to help Volvo's short-term prospects.
[Source: Bloomberg | Photo: Sven Nackstrand/AFP/Getty Images]
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Reader Comments (Page 1 of 3)
ASEVENSEE4 4:09PM (10/23/2009)
I hope it does unravel.
Volvo being Chinese owned will do more harm than good.
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Aven 4:15PM (10/23/2009)
Correct Answer ;)
Throwback 4:44PM (10/23/2009)
How often are we going to hear Geely Buying Volvo? How about letting us know when they sign the papers.
Yaroukh 5:23PM (10/23/2009)
@Throwback: Would you believe that there are actually people who hate the idea of Volvo ending in chinese hands? Does it surprise you that such people are obviously very pleased by news like this one?
b 10:41PM (10/23/2009)
ford help rebuild mazda, then mazda bought much of itself back from ford...
so they could go and ask mazda to go buy some volvo...
but does mazda really have the financial support to do such a thing?
cause all three companies share technology very closely.
Harrison 4:19PM (10/23/2009)
I don't see why Ford has to sell Volvo? Could someone fill me in?
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Yaroukh 5:11PM (10/23/2009)
The reason was "to focus on Ford" and to get money obviously. (Volvo usually generates loss recently, $230m in Q2.)
But with how the turnaround goes well so far rumors appear that Ford might keep Volvo eventually. At least I read such idea mentioned in one of the articles that reported this Ford-Volvo-Geely contract issue.
Thunderbuck 7:40PM (10/23/2009)
Actually, that's a legitimate question.
Whatever sales loss accrues to Ford because of Volvo, it has gotten a wealth of engineering and prestige in return.
It made TONS of sense for Ford to sell off Jaguar, Aston Martin, and Range Rover; these brands were contributing little if anything to Ford's overall product line. Volvo, though, has had a hand in overall Ford engineering for safety, ergonomics, and performance that carries through almost all of its lines.
I'm crossing my fingers and hoping Ford manages to hold on to Volvo.
9600baud 4:21PM (10/23/2009)
a buyer's a buyer, and when companies compete the consumer wins. Ford does not want the consumer to win.
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Epsilon-Not 4:26PM (10/23/2009)
If a company can't protect its intellectual property, a lot of incentive to innovate disappears and the consumer loses by getting stuck with outdated technology...
John 4:29PM (10/23/2009)
This isnt about the consumer.
Its about Ford's right to keep within itself the technology that it has developed.
Imagine if you spent billions of dollars to develop new platforms and technology to compete in today's market and it was in danger of being Xerox'ed by the Chinese for pennys on the dollar. Would you blame yourself?
anonymous j 5:42PM (10/23/2009)
"Its about Ford's right to keep within itself the technology that it has developed. "
Well then, it looks like Ford's not in a position to sell in the first place are they??
Honestly, if Ford is so worried they should not sell it, period. If you think about it, Ford is hoping to offload Volvo to a company that doesn't need it, but is unwilling to sell to companies that could actually put it some use, which doesn't make much sense now does it? What in the hell is the point of Geely buying Vovlo if they can't use the technology?
Victor 7:19PM (10/23/2009)
Actually, quite a few of Ford's current platforms and tech IPR originated from Volvo. Ford doesn't want Volvo IPR to leave because Volvo IPR is what Ford has relied on for quite a few things in the past 5-10 years.
inline 5 duratec? Ford's D3/D4 platform? EUCD (from C1, which is pillaged from P1)? BLIS? Haldex AWD Development?
PUH-LEEEZE! Quite a bit of Ford's latest and greatest come from Volvo
the4thheat 9:38PM (10/23/2009)
It's certainly Ford's right but then why did they even consider selling Volvo at all?!? It's not like they didn't realize that selling Volvo would mean selling a lot of Ford IP.
But they're not gonna be able to sell Volvo without selling at least some IP with it-who the hell wants Volvo just for the brand?
Bobcat 2:01PM (10/24/2009)
@Victor what a shame! But that's not true, C1 and EUCD it's origin of Ford.
John 12:03PM (10/25/2009)
If Ford was to sell Volvo to, say, GM (not going to happen), then they could probably rest assured that tomorow morning, they wouldnt wake up to a thinly-cladded GM version of the Taurus (Volvo-platform) hitting the streets as the next Lumina or whatever. The point is that the Chinese are notorious for copy-cat designs, and allowing them access to quite a few major Ford platforms and designs would be horrible.
To Victor: I did not say that its all Ford and none was Volvo. Volvo C30 and S40 are based on Ford platforms, and at least until now, the CD3 platform has been a money loser for Ford. They've created several vehicles off of it and only recently have they been able to strike with some successs.
I believe that Ford should keep Volvo and tell Geely to go copy somebody else's homework.
MM 4:23PM (10/23/2009)
I don't know why the Chinese are concern about intellectual property, they'll steal it and make cheap knockoffs of it anyway.
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mbslrm 4:26PM (10/23/2009)
I don't see why Ford needs to sell Volvo anymore.
The advantages Ford has by keeping Volvo outweigh and outnumber the advantages of selling Volvo.
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nrb 4:40PM (10/23/2009)
What are the advantages of keeping Volvo?
Many will claim that Ford platforms and technologies come from Volvo. That's not necessarily true. Ford uses Volvo as a testbed for the production rollout of platforms and technologies. There's no reason Ford couldn't use Lincoln for that.
Ford considers Volvo to be a drain on the company. I can understand them wanting to release Volvo, but I have concerns about issues like intellectual property rights.
hmmwv 4:29PM (10/23/2009)
Wait, so we want to prevent Chinese automakers from stealing technologies from US automakers, but at the same time we won't allow them to purchase the technology legally, so why not just put down "no Chinese bidder" in the bidding rules.
I guess the concern here is that should Geely buys Volvo, Ford will have a hard time limit the technologies Geely gained to Volvo's portion instead of other parts of FoMoCo. On the other hand, GM and VW all have extensive cooperation with SAIC, including R&D work, yet IP never seems to be an issue.
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