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.
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