The Chinese and Swedish: Will It Work?

Car companies do not have a great track record when it comes to mergers and acquisitions. It is rare for these transactions to work out. Hopefully the newest acquisition in the automotive industry is the exception--Chinese automaker Zhejiang Geely Holding Group recently purchased Volvo from Ford on March 28.

Geely is a Chinese car maker and it is important to note that their holding company purchased Volvo, not the car maker. This is relevant because Volvo is a very strong brand with many brand identities that could easily be lost if merged by the car maker. Zhejiang Geely Holding Group plans to allow Volvo to stay in Sweden and keep its own management team. It appears the Holding Group has done their homework of mistakes made in past mergers and acquisitions and does not want to repeat them. Allowing Volvo to maintain a high degree of freedom should make this deal successful for both parties.

The sale of Volvo also gave Ford a much needed injection of cash, about $1.8 billion worth. However, this is much less than the $6.4 billion Ford paid for Volvo in 1999.

Chrysler Opens New Engine Plant

Chrysler opened a new plant today in Trenton, Michigan to produce the new Pentastar V-6 engine. According to Click On Detroit the plant has created 400 new jobs and is the only engine plant in the world to receive a Lead Award for environmental standards.

Good job Chrysler.

The Current Landscape of the Automotive Industry

.... is bleak. The Big Three (Ford, GM, and Chrysler) almost faced extinction and are still feeling economic woes. The most reliable car company is still having issues with stopping their cars, causing a public relations crisis. Multiple car companies no longer exist-Hummer, Pontiac, and Saturn. Companies are constantly being bought and sold. The entire landscape is changing.

Something needs to change. The quality of cars, especially American cars, is improving and the trend must continue. There is plenty of hope for the industry. This blog and its future posts will shine light on this hope.