China’s Geely Weighs Bid for Ford’s Volvo Unit

Geely Automotive of China said Wednesday that its parent wants to bid for Ford’s Volvo Car, becoming the latest Chinese automaker to chase a foreign brand in a global industry overhaul.

The move could bolster the profile of Geely, a small, home-grown carmaker and, more importantly, give it access to Volvo technology it needs to upgrade its cars, analysts told Reuters, though some doubted it could manage an international brand.

Geely’s privately held parent, Geely Holding Group, would make any bid in conjunction with a government-backed investor, its chief executive, Gui Shengyue, told Reuters by telephone.

“I believe if Volvo is for sale and Ford has a global announcement, then our parent company will participate,” Mr. Gui said. “It is interested in Volvo’s sedan business and not trucks.”

Mr. Gui added that Geely’s parent was waiting for Ford to decide whether to sell the Swedish car maker, but that Hong Kong-listed Geely would not participate in any bid.

Rather than merely taking a stake in Volvo, Geely’s parent would seek full ownership, Mr. Gui told Reuters, adding Ford will make a decision on whether to sell Volvo within a month.

“On the assumption that the parent company successfully acquires Volvo, it will fine tune the product line and technology until Volvo becomes profitable, and then inject the assets into the listed company,” Vivien Chan, auto analyst with Sinopac Securities, told Reuters.

Geely, which once sold the cheapest cars in China, has been upgrading its models to tap China’s increasingly affluent drivers.

Some analysts cast doubt on the ability of privately-owned Geely to manage an international brand.

“It’s a risky move even though it may help raise Geely’s profile eventually,” Ji Junfeng from Changjiang Securities told Reuters.

“I’m not sure how Geely can turn around a brand like Volvo, but maybe we should not underestimate the ability of privately owned car makers. They have been growing very fast on their own with little help from the government,” he said.

Major Chinese automakers, including Beijing Automotive Industry Holding, have tried several overseas acquisitions in recent years with mixed results.

Chery Automobile, Hunan Changfeng Motors and several other Chinese automakers have held initial talks with European or American auto brands, but refrained from making any commitments, industry executives have said.

China’s largest automaker SAIC Motor may take a passive stake in Saab Automobile by teaming up with luxury sports car maker Koenigsegg, Reuters said, citing a source with knowledge of the situation.

So far, Sichuan Tengzhong Heavy Industrial Machinery, a little-known heavy machinery maker, is the only Chinese company to have announced a significant overseas auto buy, agreeing to acquire G.M.’s premier off-road brand, Hummer. That deal is continuing.