Geely and Volvo, two car brands in completely different worlds, got married by chance 10 years ago. A Chinese boy married a Swedish girl. This has made a huge difference in the automotive and financial circles. It is a long-lasting story.
A few days ago, the news of the tenth anniversary of Geely’s acquisition of Volvo Cars almost flooded my circle of friends. For automotive media people, this is a topic worthy of celebration, because in these ten years, , Geely has developed into China's largest independent brand with annual sales of more than 1.36 million vehicles. As for Volvo Cars, it has gone from being on the verge of bankruptcy 10 years ago and being heavily in debt to becoming a global luxury brand that has doubled its annual sales and is developing healthily and steadily.
We all know that Geely acquired Volvo Cars ten years ago, but why? How was it acquired? What did the acquisition bring?
★?Why acquisition?
Geely Automobile was founded in 1997. Although by 2009, Geely's annual sales had exceeded 330,000 vehicles. It has developed from a single Geely Automobile brand to three independent brands: Global Hawk, Emgrand and British. Group, and the acquisition of Australia's second largest automatic transmission company DSI, Geely Automobile is developing rapidly.
However, Li Shufu's sense of smell is quite keen. Ford Motor's successive losses and the continuous sale of the group's luxury brands such as Aston Martin, Jaguar and Land Rover gave Li Shufu a hunch that Volvo Cars may be sold soon.
In Li Shufu’s eyes, Volvo Cars’ advanced technology, brand influence and huge sales channels can greatly help Geely Automobile’s development. Moreover, with Volvo Cars and Ford Motor Co. With the operating status of Volvo, it is extremely possible to sell Volvo. So in 2007, Li Shufu left for Detroit in the United States and explained his intention to Bill Ford (the great-grandson of Henry Ford), then president of Ford Motor Company...
★?How was it acquired?
In Bill Ford's eyes, a company with an annual revenue of 10 billion yuan at that time wanted to acquire Volvo Cars, with an annual revenue of more than 10 billion US dollars. Who was the Chinese in front of him? What is Geely? Did this Chinese person come all the way to the United States just to make a joke in front of his own eyes?
The financial crisis in 2008 caused Ford Motor to suffer substantial losses. Ford had to speed up the pace of asset restructuring, so Volvo Cars appeared on the sale list with a price tag of US$6 billion, which was higher than Ford's acquisition of Volvo in 1999. The car is still short of $400 million. In other words, Ford would rather make a loss-making business than cut off this piece of flesh. At this time, Li Shufu made an offer to Ford Motor Company - US$3.5 billion.
Ford must have thought to himself that he had heard of Guan Yunchang in the Romance of the Three Kingdoms, but this Li Shufu's sword was much better than Guan Gong, and he cut off 2.5 billion US dollars with one swing. Want to buy my Volvo with such a small amount of money? No way!
Li Shufu, who had been rejected twice, did not give up. He concluded that Volvo Cars would definitely be in his hands. On the other side, Volvo Cars, which had no one to take over, was already heavily in debt. In 2009, its losses exceeded US$600 million. Ford was impatient to sell this "oil bottle". At this time, Li Shufu appeared again: US$2 billion. , not a penny more.
Ford Motors, which has been in business for hundreds of years, has never encountered an owner who used this kind of bargaining tactics. If the price is high, no one will buy it, and those who want to buy will pay lower and lower prices. Forget it, let’s talk to this Chinese guy.
After some negotiations, Geely acquired 100% of Volvo Cars’ equity and all related assets including intellectual property rights for US$1.8 billion plus US$900 million in later-stage working capital. "Toad" not only ate the swan meat, but not a single hair was left.
Acquisition is a classic case. However, there were quite a few voices of opposition at the time, and they even believed that Geely was making a bet of US$1.8 billion.
Yes, after all, Geely alone could not have raised such a large amount of money at that time. It had carried out huge financing through domestic and foreign banks and consortiums. If it won, it would be a successful example of leveraged buyout; If it loses, the Geely Auto brand may also be sold to others.
On March 28, 2010, Li Shufu and Ford Chief Financial Officer Lewis Booth formally signed a pledge to recruit Volvo Cars. However, how to integrate Geely and Volvo, two companies with different cultures, characteristics, and styles? Should the Chinese husband eat herring and meatballs, or the Swedish daughter-in-law eat rice?
Li Shufu's sentence "Geely is Geely, Volvo is Volvo" makes Geely and Volvo "beautiful and perfect", which not only solves the cultural differences, but also integrates different cultures, making Geely and Volvo In just 10 years, both companies have achieved something that neither company has achieved since their respective establishments.
★? Geely’s benefits
In the second year after the acquisition, Geely reached a technology transfer agreement with Volvo, including GMC (mid-level model) upgrade platform, in-car air quality Three major patented technologies, including the control system and GX7 safety innovation technology, were transferred to Geely.
So, with the help of technology from Volvo Cars, Geely launched its first mid-size car, Borui, in 2015. This is a product that subverts people’s previous impressions and understandings of Geely cars. Starting from Borui, we have also seen the tangible results of Volvo Cars’ technological feedback to Geely Automobile.
Subsequently, the CMA platform was born. This new basic module platform led by Volvo Cars and participated in the development by Geely Automobile not only allowed Volvo to have a new compact SUV like the XC40, but also allowed Geely Automobile to create It has launched a new brand - Lynk & Co, and is ready to be compatible with fuel models and PHEV models on the CMA platform. In addition to applying the CMA basic module architecture, Volvo's 2.0T Drive-E high-power engine is also applied to the Lynk & Co 05. With the experience and foundation of the CMA platform, Geely applied what it learned and developed the BMA platform completely independently, and launched Binrui and Binyue.
In addition, Geely and Volvo Cars have made full preparations for the development of electrification strategy. The PMA pure electric vehicle platform jointly created by both parties will be used in the two brands of Geely and Lynk & Co. For pure electric models, this is a manufacturing platform that can cover the range from A0 to B-class. A new vehicle factory has been built in Hangzhou Bay, Ningbo, where new PMA platform models will be manufactured in the future.
The application of Volvo technology and platform modularity has allowed Geely to avoid many detours on the road of research and development. Since the acquisition of Volvo Cars, Geely’s products have improved from appearance and interior design to power system Performance, as well as chassis and suspension tuning, have been significantly improved and remain at the leading level among independent brands.
★?Volvo’s turnaround
Of course, it costs money to marry a wife, and it also costs money to raise a wife. After acquiring Volvo Cars, although they said "Geely is Geely, Volvo is Volvo", it did not mean to abandon it and let it fend for itself after acquiring the technology.
Since 2012, Geely has promised to invest US$11 billion in Volvo Cars for the development of new platforms and the establishment of factories in China. So far, Volvo Cars has three locations in China: Chengdu, Daqing and Luqiao. The vehicle factory, an engine factory in Zhangjiakou, as well as the R&D center, design center and Asia-Pacific headquarters in Shanghai, are also constantly adding new factories in Europe and North America. The total number of employees in China was only 188 10 years ago, but now it exceeds 8,000, and annual sales have increased from 300,000 vehicles 10 years ago to more than 700,000 vehicles last year.
Some media in the United States once listed Volvo Cars as a "disappearing brand." Now, Volvo Cars not only has not disappeared, but has developed even better. It is not easy, or rather a miracle, for a Chinese private enterprise to successfully develop a luxury car brand from Europe and a multinational car company with a history of nearly a century. And all this only took 10 years.
Just in February this year, Geely and Volvo Cars announced that they would integrate their businesses to form a more powerful global automobile company. Although Geely Automobile, Volvo Cars, and Lynk & Co Cars will remain after the integration, and Polestar and other brands, but the new business group will achieve more effective synergies in terms of technology research and development, cost control and finance, making it more competitive.
This also seems to mean the beginning of a new decade.
The author of this article is Jia Yuntao, the kicking car gang.
This article comes from the author of Autohome Chejiahao and does not represent the views and positions of Autohome.