Geely Acquires Volvo: An Analysis of Snake Swallowing


In the two “Snapping Elephants” dramas staged in this year’s auto market, Geely’s acquisition of Volvo is generally considered one of the best. Whether Geely can achieve the "middle and high-end line" by welcoming new people has become the focus of attention in the industry.

Unlike the question of the acquisition of Hummer by Tengzhong "Swimmer Elephant", Geely announced that it would like to acquire Volvo. "This has a lot to do with the Volvo brand. It is already a very mature and well-recognized brand both internationally and domestically. Before the Hummer, because it was a military vehicle, civilian consumption was limited, so most people would I am worried.” Han Guang, deputy secretary-general of the Economic Development and Research Branch of the China Automobile Engineering Society, analyzed the report.

On October 30, Li Shufu, chairman of Geely, who had two overseas acquisitions, told the outside world that Geely’s acquisition of Volvo was successful. It is understood that Geely’s purchase price of 16 billion yuan to 20 billion yuan has been supported by the Chinese Bank.

Two overseas mergers and acquisitions before Geely can be described as extremely successful cases of overseas acquisitions by Chinese car companies. In 2006, it became the controlling shareholder of the British Manganese Bronze Holdings Co., Ltd. in a 52% share of the company. It achieved the Chinese party’s controlling share and passed the production transfer, skipping the complicated cultural differences and the troubles of labor relations, and directly realized localization in China. Low cost production. In March 2009, Geely unexpectedly successfully acquired Australia’s DSI Automatic Transmission Co., Ltd. when people were still speculating about the “defective” relationship between Geely and Volvo. Geely achieved gearbox technology at a very low cost and speed. A leap forward.

The two successful acquisitions also gave the industry a new understanding of Geely. At the same time, the ability of the leader, Li Shufu, cannot be underestimated.

“This big acquisition by Li Shufu is also consistent with its previous strategic direction of abandoning the price war and taking the middle-end and high-end brand routes.” Mr. Li, a senior expert in the automotive industry, revealed to reporters.

In this acquisition, Geely fully demonstrated its sincerity. In Geely’s announced acquisition plan, the reporter noticed that Geely’s conditions for Volvo are still quite rich. In addition to emphasizing the independence of Volvo management, the program highlights allow Volvo to purchase spare parts in China; use and use China's sales network channels; retain existing production, research and development equipment and capabilities; and retain existing trade union contracts; Retain existing dealer systems and networks.

"These are also one of the factors that Volvo can choose Geely to acquire." Mr. Li analyzed. At present, the acquisition of Li Shufu is a way to save the country through curves.

"Geely will not make major changes to Volvo even if it is successful, and will remain unchanged." Professor Lin Jingxin of Sun Yat-sen University also said in an interview with a reporter from the "China Sankei Shimbun".

At the same time, Geely's acquisition of Volvo is widely praised by the industry.

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