Volvo to flourish under Geely ownership?

Ford will sell Volvo to Geely for US $1.8 billion dollars -- roughly $4.2 billion short of the purchase price Ford paid for the Swedish prestige marque originally.

Yet the divestment is not a 'fire sale' scenario, says Volvo's local Managing Director, Alan Desselss.

"I'm not so sure that 'fire-sale' is the correct word... "I think it's very important that we don't put it through as a 'fire sale', because I don't believe it is a fire sale. Alan Mulally [Ford CEO] has come out and said: 'the sale of Volvo is not about Volvo, it's more about Ford'.

Desselss' point is well made. Volvo might be the subject of a fire sale if Ford anticipated dumping it before it was utterly worthless, but while Volvo sales in the US slid backwards at a rapid rate during the Global Financial Crisis, they began to come good again in 2009. In fact, it was probably Volvo's improving prognosis in the US that encouraged Ford to place the manufacturer up for sale, recognising Volvo might be more attractive to a buyer, as a viable, profitable concern.

"Alan Mulally has done a fantastic job in getting Ford back on track -- and part of that was, unfortunately to get rid of certain assets... of which Jaguar, Land Rover, Aston Martin and Volvo are all of them," Desselss continues.

"I don't think it was a fire sale, in fact they never said they'd do it at any deal. You only have to have a look at it and understand that at this stage, there's certainly very few people in Europe and very few people, if any, in America that would be able to purchase Volvo."

In other words, even at the 'discounted' rate of $1.8 billion, it's an expensive purchase for Geely in the current market -- and that by itself suggests long term plans for the Volvo brand.

And that must be a comforting thought in light of the remark made two days ago by Ford CFO, Lewis Booth, that Geely was "primarily" acquiring Volvo's intellectual property. What did that mean? The IP is worth considerably more than the company's physical assets and they're ripe for stripping by Geely? That might be reading too much into Booth's remarks, based on Desselss' subsequent remarks.

"Certainly the only thing that I can say is that it's my understanding that Geely intends to maintain Volvo and keep Volvo operating and to grow Volvo into the future," says Desselss.

"My understanding is that they see the benefit and the value in Volvo and wish to continue with the name and the product long into the future."

And if you want an example of a true fire sale, Desselss is happy to provide one: "I think BMW sold Land Rover to Ford for a dollar, so I think the terminology of 'fire sale' is all relative. $1.8 billion is certainly a hell of a lot better than a dollar."

Read the latest Carsales Network news and reviews on your mobile, iPhone or PDA at www.carsales.mobi