This Is Not A Drill: Ford In Concrete Talks To Sell Volvo To China

Bertel Schmitt
by Bertel Schmitt

Yesterday, we reported that Ford is in a big hurry to unload Volvo to interested parties (preferably) in China. The article quoted a story in London’s Times. The Times had received information that Ford is talking with SAIC to take Volvo off Ford’s hands. There are more interested buyers: Top executives of Ford’s Chinese joint venture partner Changan are in talks with Ford to buy Volvo. This according to China’s National Business Daily which has it from an insider at Changan.

At the Guangzhou auto show last month, Volvo’s top executives had long talks with Changan Auto president Xu Liuping. When Ford Motor announced its plan to sell Volvo, the presidents of Ford Asia Pacific, Ford China, and Volvo China met Changan’s president at Changan’s HQ in Chongqing for closed-door talks. NBD’s source added that it is logical for financially troubled Ford Motor to consider Changan as a possible Chinese partner of its Volvo brand, because they have the Changan Ford Mazda joint venture which is also producing the Volvo S40 and S80 models. There are more reasons to buy …

Allow us to reiterate why buying a foreign brand with international distribution would make absolute sense for a large Chinese automaker, and a large Chinese automaker only: The Chinese automotive industry is under considerable pressure to get on with their car exports. China is already the world’s second largest auto market. China will end 2008 as the world’s second largest auto producer. As an exporter of cars, China is a nobody. Last October, the officious China Daily rendered the official verdict: “China’s auto export numbers are discouraging,” There are a few exports to third world countries and Russia. These countries have problems with their economies and currencies. Europe, Japan, and the US have remained white spots on China’s export map. It’s not for a lack of trying. Europe, Japan, and the US are using every regulatory trick in their vast arsenal to keep home-grown Chinese cars out. Home-growns lack the engineering clout and money to break through these barriers.

Most of the cars currently built in China could be exported immediately. The cars built in China under joint venture agreements are for all intents and purposes identical to their American, German, Japanese, or French counterparts. Same design, same technology, same production methods, same parts, same quality standards. But under current contracts, these cars cannot be exported. If a Chinese company buys the joint venture partner, that limitation falls. Changan could sell made in China Volvos worldwide at the stroke of a pen. The dire straits of Ford and GM could give China the keys to quick-start their export machine. Furthermore, China is concerned about Detroit’s demise. They bought a lot of Chinese parts, either directly or through companies like Delphi or Federal Mogul who use China as a production base. Parts orders are way down. Believe it or not, a lot in Made-in-China cars are imported parts. By law, 40% of fleet must be local content. A lot of the completely new models are TKD, totally knocked down, made entirely from foreign kits. It is in China’s best interest that Western brands survive and that the supply lines, back and forth, do not get distrupted,

TTAC’s incessant interest in the tête-à-têtes between US and Chinese automakers is raising interest in China. In their reporting of the Changan-Ford dealings, Gasgoo felt compelled to add: “‘The urgent deal between SAIC and Ford also explains the suave reaction of Changan, Ford’s joint venture partner in China. If the deal is consummated, Changan could sell their Ford operation to SAIC, or SAIC could swallow the whole Changan kit and caboodle,’ said a news blog (“ Confirmed: Ford Wants To Sell Volvo To China Real Fast) by Bertel Schmitt at www.thetruthaboutcars.com on December 8.”

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

More by Bertel Schmitt

Comments
Join the conversation
2 of 22 comments
  • Bertel Schmitt Bertel Schmitt on Dec 09, 2008

    @factotum: I've heard that the dollar rose drastically against the Euro since July and is range-bound since October.Doesn't seem to want to break out of the 1.25 -1.29 range against the Euro. I've heard that the Yen rose due to the collapse of the Aussie/Kiwi carry trade. I've heard that the Yuan didn't budge against the Dollar. I've heard that gold was over $1000 in March and it's said to trad around $770 now. I've also heard that the T-Bill yield is next to zero.

  • PeteMoran PeteMoran on Dec 09, 2008

    Bertel, I agree with what you are suggesting, but it's not what I'm saying. ....if that pressure washer was made by Karcher, then they screwed up on quality management. It's not that simple as part of my point is, Karcher have been happy to lower the quality on the insistence of consumers (real or otherwise) that things be cheaper cheaper cheaper, and now items like this are made twice. When one considers the resources of the planet, it is not sustainable. It's happening with electronics and it would be frightening to think this might begin to happen with cars.

  • CanadaCraig You can just imagine how quickly the tires are going to wear out on a 5,800 lbs AWD 2024 Dodge Charger.
  • Luke42 I tried FSD for a month in December 2022 on my Model Y and wasn’t impressed.The building-blocks were amazing but sum of the all of those amazing parts was about as useful as Honda Sensing in terms of reducing the driver’s workload.I have a list of fixes I need to see in Autopilot before I blow another $200 renting FSD. But I will try it for free for a month.I would love it if FSD v12 lived up to the hype and my mind were changed. But I have no reason to believe I might be wrong at this point, based on the reviews I’ve read so far. [shrug]. I’m sure I’ll have more to say about it once I get to test it.
  • FormerFF We bought three new and one used car last year, so we won't be visiting any showrooms this year unless a meteor hits one of them. Sorry to hear that Mini has terminated the manual transmission, a Mini could be a fun car to drive with a stick.It appears that 2025 is going to see a significant decrease in the number of models that can be had with a stick. The used car we bought is a Mk 7 GTI with a six speed manual, and my younger daughter and I are enjoying it quite a lot. We'll be hanging on to it for many years.
  • Oberkanone Where is the value here? Magna is assembling the vehicles. The IP is not novel. Just buy the IP at bankruptcy stage for next to nothing.
  • Jalop1991 what, no Turbo trim?
Next