MercoPress. South Atlantic News Agency

Chinese auto maker could acquire Ford's Volvo brand

China's Geely is expected to submit a bid to acquire Ford's Sweden's Volvo brand in a bold attempt to expand internationally. There are at least three other possible bidders, one of which is also a Chinese company, according to one of the people.

Ford and Geely have been talking about Volvo for several weeks, according to reports in the New York press. Geely chairman Li Shufu met senior Ford executives in mid-January, around the time of the Detroit auto show, in Dearborn, Michigan Ford is based. Other representatives of the two companies have held separate talks in recent weeks, the person said. Ford had no immediate comment, but a person close to the company acknowledged the Chinese company had been in talks with Ford for more than a year over a possible Volvo deal. Wang Ziliang, a spokesman for Geely, declined to comment. In early February, Mr. Li, speaking through an assistant, denied a news report that his company was holding talks with Ford about buying Volvo. Many analysts believe this could be the start of a wave of consolidation in the auto industry brought on by the economic crisis and the lowering of consumer demand due to tighter credit. In December, Fiat chief executive Sergio Marchionne predicted that only six major auto makers would survive globally. Three European auto brands - General Motors' Saab and Opel, and Ford's Volvo - have effectively been put on the block in recent weeks as the US auto giants try to cut costs and restructure. A Geely bid for Volvo would be an unusual and risky move for a Chinese auto maker to take advantage of the global downturn and leap forward with its international ambitions. Chinese companies have made a string of investments in natural resources, but so far have largely avoided buying major assets in other industries such as finance and manufacturing, despite often fire-sale prices. Chinese auto companies have acquired foreign assets in the past - with mixed success - but never on Volvo's scale. Last week, Chen Bin, a senior official with the National Development and Reform Commission, China's main economic planning agency, publicly warned about the risks that acquiring a struggling foreign auto concern would pose for Chinese car makers. "We need their technology, brands, talent and sales networks," he said, referring to foreign car makers. But "it will be a very big challenge for Chinese companies to stabilize the operations of foreign auto makers and to maintain growth." Last year, Volvo's US sales fell almost 32%. It also saw declines in its market share in the US and Europe. The Swedish brand posted a 736 million US dollars operating loss in the fourth quarter. As part of its restructuring, Volvo trimmed one-fourth of its work force by the end of last year. Ford has already sold its British brands Jaguar and Land Rover to the Indian consortium Tata.