One of the biggest questions facing the global automotive industry is what to say about China. While the country’s people can’t buy enough foreign cars, China’s domestic auto makers are still in their infancy.
The Wall Street Journal reports in an August 27th article that the sale of Volvo to Chinese auto maker Geely has been successful and Geely is already drawing up plans for its new acquisition. The article reports Geely to be planning several new Volvo factories and research centers in China to lower the cost of production for many Volvo models. However, the article also points to many doubts analysis’s have that Geely can make Volvo successful. Firstly, Geely, or any other Chinese automaker, has never managed a global brand like Volvo. Secondly, Geely, like all other Chinese auto makers, is not known for quality or good design.
I have my own doubts about the Chinese automotive industry and their acquisition of brands like Volvo as well. There is a massive contradiction within what Geely is planning. By moving production of several Volvo models to China for cost of labor reasons, the quality could really suffer. I also doubt the ambiguous plans for creating a Volvo research center in China as Volvo is known for Swedish engineering. It seems Geely’s plan could undermine the Volvo customer base. People buy Volvos because they know they are safe and designed by smart Swedish people. China is hardly known for quality or safety within the American psyche. If word gets out that new Volvos are being designed and built in China, will loyal Volvo customers still come back to the showrooms? I doubt it.
I too have questions about Geely's ability to manage Volvo. I suspect that they will rely heavily on Americans, Europeans, and other East Asians (Japanese and South Koreans). That would be the smart move, since most Chinese companies lack experience in the luxury car market. I do think that Chinese manufacturing quality could match that of Europe in terms of quality.
ReplyDeleteWould you buy a Geely over a Toyota, Hyundai or any other Asian compnay?
ReplyDeleteAlthough I have some questions about how Geely will successfully manage Volvo, it is important to remember that other Asian countries besides China used to be known for producing low-quality vehicles. Automakers from Japan and Korea have already secured their grounds internationally, it won't take China's long to achieve the same.
ReplyDeleteI agree with Felipe. Volvo will still be known as Volvo and not as Geely. Honestly, how many people really know that Volvo will now be owned by Geely? Many people also had doubts when Ford acquired Volvo since Ford did not have the best reputation at that time.
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