Geely edges closer to acquiring Volvo

Several anonymous sources has reported that Geely has signed a letter of intent to purchase Volvo from Ford, and revealed that Geely and Ford were still ironing out the details of the deal, including the transfer of technology, Volvo's marketing and market position and possibly layoffs.

If successful, Geely hopes to start producing Volvo cars in a new factory in the Guangdong Province of China and will also invest US$10 billion in building the Volvo brand. The first model to be designed and engineered under the new ownership is expected to be the next XC90 SUV, due in 2011.

ious reports suggested that Chinese automakers Dongfeng Motor Group, Beijing Auto and Chongqing Changan Automobile Co, as well as a European consortium, were among the final bidders, but it appears that Geely is the sole remaining party interested in the troubled Swedish carmaker.

The Swedish government has announced that it will offer US$572 million in loan guarantees to entice any company to takeover Volvo, and the acquisition could be seen as a coup for Geely, who could stand to benefit from Volvo´s research and development teams and reputation for safety, which so far has been lacking in most Chinese made cars. Volvo's North American dealership network could also be a springboard for the Chinese carmaker to enter the lucrative American market.