Volvo Witnesses a Reversal of Fortunes Under Geely ownership: Emphasis on Safety and Made in Sweden Brand Boosts Growth

In 2010 Volvo was acquired by Geely from the Ford Motor Company. Volvo, which struggled financially in the latter years of Ford’s ownership, has seen a strong reversal in its fortunes under the ownership of Geely in recent years. This case study analyzes the reasons for this turnaround.

Scope

– Why did Ford sell Volvo?

– Why did Geely buy Volvo?

– How has Geely overseen a reversal of fortunes for Volvo?

– What role has the new leadership team played in Volvo's recent success?

– How has Volvo looked to position its brand post acquisition?

– Wha

Reasons to buy

- Assesses Volvo's performance under the ownership of Ford.

- Looks at the reasons for Ford's decision to sell Volvo.

- Analyzes Geely's reasons for buying Volvo.

- Explores how employing a European management team has played a key role in Volvo's turnaro

Table of Contents

Table of Contents

Overview 2

Catalyst 2

Summary 2

Geely purchased Volvo from Ford for $1.8bn in 2010 6

Volvo was troubled under Ford and last managed to make a profit in 2005 6

Ford sold Volvo for $4.7bn less than it paid 7

Volvo”Ÿs financial performance has improved under Geely 9

Geely introduced an experienced team to take over Volvo after acquisition from Ford 9

Volvo”Ÿs revenue and net income continues to increase under Geely ownership 10

Resurgence down to focus on safety, Sweden brand and improving industry conditions 12

Geely has adopted a decentralized approach encouraging the Volvo brand”Ÿs ties to Sweden 12

Improving situation in the car manufacturing industry has boosted growth 13

Despite initial differences with Geely leadership, Volvo future looks stable and also electric 15

Differences emerged initially between Volvo leadership and Geely over the direction of the company 15

Electrification and increased partnerships with Geely owned companies is the future for Volvo 15

Conclusions 17

Impressive growth made possible by high level of autonomy, focus on Swedish identity, and improving market conditions 17

Appendix 18

Sources 18

Further Reading 19

Ask the analyst 20

About MarketLine 20

Disclaimer 20

List of Tables

List of Tables

Table 1: Number of cars sold by Volvo per annum between 1999 and 2009 10

Table 2: Sweden”Ÿs rankings on various international rankings measuring for example innovation or competitiveness 13

Table 3: Price of electricity in $ per kWh for industrial consumers of various European countries 14

List of Figures

List of Figures

Figure 1: Net income of Ford Motor Company, $m, 2002-2012 6

Figure 2: Revenue of Ford Motor Company, $m, 2002-2012 7

Figure 3: Assets of Ford Motor Company, $m, 2002-2012 8

Figure 4: Geely managed to attract experienced leaders like Stefan Jacoby to Volvo following the acquisition 9

Figure 5: Net Income of Volvo, $m, 2011-2017 10

Figure 6: Volvo percentage change in car sales and revenue, 20 11

Figure 7: Zlatan Ibrahimovic and HÃ¥kan Samuelsson, CEO of Volvo Cars at the 2014 Paris Motor Show 12

Figure 8: Value of European, Chinese and North American car manufacturing industries, $ bn, 2013-2017 14

Figure 9: Volvo is heavily involved in the production of new Lynk & Co cars 16

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