Geely Agrees To Buy Volvo For $1.8B

March 29, 2010

Chinese auto manufacturer Geely announced it has reached an agreement to buy Volvo from Ford for $1.8B. Ford has been shopping Volvo around with no takers for so many years now, you’d think they had only been marketing it in the Cars and Trucks For Sale section of Craigslist.

While one might argue that the price paid was way too high for the financially-troubled Swedish brand, but it is certainly a win-win. Ford finally rids itself one of the last of the Jaques Nasser-era money-losing albatrosses, while Geely becomes the first Chinese company to pick up a real internationally-recognized auto brand — and one with a good dealership network capable of selling and providing warranty service for Geely brand cars in the near future. The fact that Volvo is synonymous with safety is also a huge value to Geely — a company based in a country known for constructing buildings without rebar and making food with dangerous chemicals.

The nearly two-billion dollar question, however, is are we looking at another DaimlerChrysler merger where instead of Chrysler quality improving, Mercedes quality (as well as reputation and financial earnings) sunk like an anchor? If the perception of Volvo’s safety or quality (neither of which are as good as actual insurance loss and JD Power reliability surveys indicate) diminishes at all, the value of the merger for Geely goes from moderate to something akin to a Disney Channel teen superstar’s abstinence pledge: nil.

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Saab Gets One Step Closer to Death

January 11, 2010

Normally I wouldn’t get too bent out of shape seeing a press release spelling out that an automaker’s days were very short. I must admit, however, that reading yesterday’s notice that Saab’s Board of Directors voted in favor of liquidating the corporation’s assets I was actually kind of sad.

The weird part is that I have never owned a Saab, nor have I ever even come close to considered buying one. For the most part, I’ve never really even liked Saabs. I’ve consulted with plenty of people in the last decade where I’ve specifically told them to avoid buying a car from this manufacturer that claimed so many specialty mechanics around the country also telling Saab drivers that later products were overpriced and too prone to catastrophic failures.

For me, the last great Saab with mass-market appeal was the 9000 from the 1980s. The 9000 was not only a hot car by period standards, but also one of the first stick shift cars I’d ever driven. (At this point in my life, I can’t remember if I drove the 9000 before or after the Nissan Pulsar.)

What hits me in the soft spot is that Saab has such a long history of doing things totally different. In a world of automotive monkey-see-monkey-do, for decades Saabs were quirky. Quirky might not be for everyone, but Saab did provide options for those engineers, college professors and mathematicians who were convinced that two-strokes, front wheel drive, or bathtub design were better for humanity.

GM killed Saab’s value by emasculating the marque’s individuality. With platform and parts sharing with the likes of Subaru, Saab lost the quirky practicality image of the 1960s and 1970s, and Swedish sport-luxury image of the 1980s and early 1990s.

The company had such amazing competition history with the legendary likes of Erik “On The Roof” Carlsson piloting Saab 92, 93, 95, and 96 models to great rally finishes. Ironically, it is because of competitive failure — against Volvo, Lexus, not to mention the hoard of SUVs and crossovers that Saab’s demise is rapidly approaching.

When a company ceases to provide reliable, cost-effective and differentiated products, the options are few. GM simply didn’t see a large enough market to invest large sums reinventing Saab, something with which I totally agree. A company could have bought the line and focused on producing modern interpretations of classic Saab design ethos, but as Koenigsegg found out, that strategy is ripe with labor, dealer, supplier, and warranty pitfalls.

Although GM still claims they are looking for a buyer, the long and short of it is that the world won’t stop the presses to save a company that only sold 8,680 cars in the US during 2009 (and only 124,438 vehicles worldwide in the glory days of in 2007). Just don’t be amazed when some out there continue to speculate and miss what might have been if the company had remained just a little quirkier.