Brand Health Check... Will Geely's new ownership of Volvo pave its way into China's luxury car market?

Geely wants to make quick inroads into a booming luxury car market to compete against the likes of Audi, BMW and Mercedes. On paper, the Volvo purchase should also aid its global ambitions and act as a shortcut to attain access to the global auto market.

The Chinese car manufacturer is further keen to get its hands on Volvo technology, which would help dispel concerns about the quality of its vehicles and generate awareness among foreign consumers.

Geely, however, has its work cut out as former directors of Volvo have already raised doubts about the Chinese firm’s “technical competence”. Analysts are sceptical that the Swedish luxury car’s ethos can be fully grasped by its new owners.

For a brand that was established in Gothenburg in 1927 and still employs about three quarters of its workforce (or 20,000 workers) in Sweden, Volvo’s transition to other parts of the world has never been easy. This is a fact that Ford would attest to, having failed to either build on or export the Volvo brand name and culture effectively.

Ford’s chief financial officer, Lewis Booth, has so far hinted that Geely is likely to preserve the Swedish car brand’s long heritage and independence in the next stage of its evolution.

Renowned across Europe for its stylish, durable and safe vehicles, Volvo cannot afford for its image to be damaged over the coming year. How the Chinese manufacturer fares in this respect will prove the real litmus test.

All said and done, no matter Volvo’s fate, the car brand should be thankful that it has been offered a new lease of life - given that another famous Swedish car unit, the General Motors-owned Saab, is heading for oblivion.

Comments

Tim Riches, Asia-Pacific CEO, Singapore, FutureBrand "Geely will need to preserve these positive Swedish qualities and add to them the brand China strengths of efficiency and economic power. It needs to be the best of both worlds, not the worst." A full diagnosis was published in the 14 January 2010 issue of Media.

Klaus Paur, regional director automotive, North Asia, TNS Research "Geely could emphasise Volvo's premium image on an attractive price level. An elevated proposition of value for money has potential to appeal in China as well as the rest of the world." A full diagnosis was published in the 14 January 2010 issue of Media.

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This article was originally published in the 14 January 2010 issue of Media.