What Geely gets from its Volvo deal

Emblem for Chinese car maker Geely

TEXT OF STORY

Bill Radke: Chinese car maker Geely is buying Volvo for $1.8 billion. The biggest acquisition so far by the fast-growing Chinese auto industry. So what are the buyers getting for their money? Here's our senior business correspondent Bob Moon:


Bob Moon: It might seem the Chinese are buying some valuable know-how for their $1.8 billion. After all, Volvo's advertising has long stressed its cutting-edge safety systems and other high-tech features.

VOLVO VIDEO: The front structure of the new Volvo XC60 was designed to distribute collision energy over the entire car body.

Volvo may be a Swedish brand, but much of its technology has been developed under Ford's ownership in recent years. At CSM Worldwide, auto industry analyst Michael Robinette says that's why it's likely the American automaker set some limits on the sale to the Chinese -- so it doesn't end up finding itself competing against its own technologies:

Michael ROBINETTE: Essentially, every Volvo vehicle is based off of a Ford platform, so certainly Ford technology is part and parcel of the Volvo network right now.

Robinette says the Chinese buyers are getting their hands on other valuable assets, including a global dealer network and a respected name:

ROBINETTE: Geely will definitely carry forward the Volvo brand name. It has great brand equity, so certainly they would be foolish to allow that to die with the sale.

Indeed, Volvo's labor unions were careful to ensure that before they approved the deal.

I'm Bob Moon for Marketplace.

About the author

Bob Moon is Marketplace’s senior business correspondent, based in Los Angeles.

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