Ford May Sell Volvo to Geely

Today, Ford Motor (F) will reveal its progress on the sale of Swedish brand, Volvo. The automaker is most likely to sell the unit to China-based Zhejiang Geely Holding Group. Ford aims to conclude the sale in early 2010. 

Ford had discussions with many automakers to sell Volvo, including Renault SA, China’s third-largest automaker, Dongfeng Motor Group and fifth-largest automaker Beijing Automotive Industry Holding Corp. In October, Ford revealed that the preferred bidder is Geely, who has submitted a concrete bid for the unit. Media reports had disclosed that Geely valued the unit at close to $2 billion. 

Geely’s bid is backed by the Beijing Government. Three major Chinese banks, including Bank of China, China Construction Bank and Export-Import Bank of China have agreed to extend loans to the Chinese automaker for the deal. 

In 1999, Ford had acquired Volvo Car Corporation from Sweden-based Volvo Group for $6.45 billion. However, the company had put up the unit for sale in December last year in an effort to cut costs and raise cash amidst plunging industry-wide auto sales. 

In the first half of 2008, Ford sold its U.K.-based Jaguar and Land Rover brands to the Indian auto giant Tata Motors (TTM). The company sold the unit for $2.3 billion, about half the price at which it was purchased from BMW in 2000. 

In the latter half of 2008, Ford shrugged off its 20% stake in the Japanese automaker, Mazda Motor, for $540.3 million. The company reduced its stake in Mazda to 13.4%, which it had rescued from bankruptcy in 1979.

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