If sold, Volvo may replace Audi as Chinese state officials’ car of choice

Article by Christian Andrei, on August 26, 2010

As soon as Zhejiang Geely Holding Group seals the deal to purchase Ford Motor Co.'s Volvo unit, the Audi A6's standing as Chinese state officials' car of choice could be threatened.

Li Shufu, the head of Geely, hopes to successfully acquire Volvo for up to $2 billion. Li, 47 years old, has been compared to Henry Ford because of his ambition to create a mass manufacturer of affordable cars.

Already, Li is planning a factory in Beijing that can produce the same number of Volvos in China as in foreign countries.

John Zeng, an analyst with IHS Global Insight, an industry consultancy, said that Li Shufu bet huge and the stakes are extremely high. However, Zeng thinks that he could win since he can rely on the China market to turn Volvo around.

Last year, China replaced the United States as the top auto market. In fact, China is now a key source of business for global carmakers as well as domestic newbies, which are looking for global acquisitions in order to get ahead.

However, Chinese carmakers are likely to have a tougher time than the Japanese and Korean companies despite an expanding home market and a supportive government to take domestic cars to the global market.

Topics: volvo, audi, china

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