Geely May Gamble Its Future On Bid For Volvo

The Wall Street Journal reports that Geely is likely to bid for Ford Motor’s Volvo division, possibly a soon as next week. Just last week, Chen Bin, a senior official with the National Development and Reform Commission, China’s main economic planning agency, said that Chinese car makers weren’t strong enough to bid for international brands and that consolidation of the domestic industry should come first. Perhaps Geely didn’t get the directive, but then a month ago the company said it had no plans to buy Volvo, just as the commission gave it the nod to look at such a deal.

Geely is a medium-sized privately owned if ambitious sedan maker; it is not too fanciful to imagine that Beijing would prefer a company like that to dip a toe into the turbulent waters of the international car market right now rather than one of the big state-owned auto companies such as FAW, Shanghai Auto or Dongfeng. There would be some in the state auto sector who wouldn’t be too sorry if Geely did come a cropper in the process (reminds us of Honda when Japan’s bureaucrats thought it an unruly upstart that should have no place in car making). But if it could pull it off, Geely would leapfrog into the front line of Chinese car makers, especially as Volvo makes 50% of its sales in the U.S.

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Filed under China-U.S., Economy

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