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(SOUNDBITE) (English) REUTERS REPORTER, JANE LANHEE LEE SAYING: "China's becoming an aggressive buyer of big global brands. ...
In 2010, Chinese automaker Geely took over Volvo. Earlier, I caught up with
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(SOUNDBITE) (English) REUTERS REPORTER, JANE LANHEE LEE SAYING: "China's becoming an aggressive buyer of big global brands. In 2010, Chinese automaker Geely took over Volvo. Earlier, I caught up with auto consultant and author, Michael Dunne, and asked him how the two companies are faring since the takeover." (SOUNDBITE) (English) PRESIDENT, DUNNE & COMPANY, MICHAEL DUNNE SAYING: "Geely's doing a little bit better, much better designs and reliability. Probably the best Chinese independent automaker of them all right now. Volvo, on the other hand, much worse. They came in after the acquisition as a high-cost producer of near-luxury cars. It's still a high-cost producer of near-luxury cars that's selling nowhere near what Geely expected. So the big expectation when Geely bought Volvo was that 'Hey, we're going to unleash this terrific Swedish brand to the world. We're going to reintroduce it, repackage it, and everyone will eat it up.' Well, today, sales in North America and Europe, and in China, most recent sales flat or down. It just hasn't caught the imagination of consumers globally like it was expected to and now they find themselves saddled with tremendous costs and a weak, diluted brand. That's trouble for anybody. Don't know how to get out of that situation." (SOUNDBITE) (English) REUTERS REPORTER, JANE LANHEE LEE SAYING: "So who's the winner and loser in the deal?" (SOUNDBITE) (English) PRESIDENT, DUNNE & COMPANY, MICHAEL DUNNE SAYING: "Well, probably the biggest winner of all is a company from New York called Goldman Sachs, who facilitated the original investment by Geely by investing $250 million just about three years ago. Now last week they sold half of those shares, already making a huge profit on that. They're the clear winners in the deal. Geely's done better because their designs and their reliability are improving. They've even brought some Volvo designers over to China to work on Geely cars. And if you look on the streets of China, they're looking not bad. Now the test for Geely is when will today's buyers of Toyota, or Hyundai, or Chevy, or Ford say 'You know what? I'm going to go to Geely next.' We're not there yet. We're not there yet. And it'll take several more years before Geely is able to steal away those kinds of customers." (SOUNDBITE) (English) REUTERS REPORTER, JANE LANHEE LEE SAYING: "So when Geely paid to buy Volvo, it paid to buy that brand. Is it making good of that brand? What's it getting out of that?" (SOUNDBITE) (English) PRESIDENT, DUNNE & COMPANY, MICHAEL DUNNE SAYING: "Well the hope was that after buying Volvo, they'd go in and use their Chinese prowess in cutting costs and at the same time introduce the Volvo brand to Chinese customers, and those two things would just dovetail and everything would end well for Volvo. That hasn't happened and as a result, Volvo's looking around today and saying 'In order for us to be a world-class producer and reduce our costs, and have a great luxury brand, we need billions more in investment. And we need expertise, and we need some political power because we've got to move out of this high-cost European production base.' Can Geely deliver that? Probably not."