Ford: China's Geely preferred bidder for Volvo

Ford Motor Co. has picked a consortium led by China's Geely Group as the preferred bidder to buy its Swedish Volvo Cars unit, the U.S. automaker said Wednesday.

Ford said the selection signals that it is conducting "more detailed and focused negotiations" with Zhejiang Geely Group Holding Co. Ltd. about the sale.

The announcement means that both sides have reached a fundamental agreement to sell the storied brand, but details such as price still must be worked out, according to a person briefed on the negotiations.

The person, who asked not to be identified because the talks are private, said Ford and Geely are "on the same page" about sharing key technology and other items, but no definitive sales agreement has been signed.

Ford, based in Dearborn, Mich., acquired Volvo in 1999 for $6.45 billion from Volvo AB, and for 10 years the companies have shared safety and other technology. For instance, Ford's flagship family sedan, the Taurus, is based on Volvo underpinnings.

Any agreement would included details about sharing intellectual property rights and engineering, the person said.

Ford has wanted to unload Volvo since last year to raise cash and focus its efforts on three core brands: Ford, Lincoln and Mercury.

If the sale goes through, it would be another step in the U.S. auto industry's retrenchment from global operations, and another investment in them by a Chinese company.

Earlier this month, General Motors Co. sold its rugged Hummer brand to construction machinery maker Sichuan Tengzhong Heavy Industrial Machinery Corp. The sale awaits regulatory approval.

GM also sold its Saab brand to Swedish specialty automaker Koenigsegg Automotive AB, which has a Chinese partner, and it is selling control of its European Opel unit to Canadian and Russian interests. That deal is still in complex talks with European governments.

Last year, Ford sold its Jaguar-Land Rover brand to India's Tata Motors Ltd. for $1.7 billion. It took roughly three months from the date that Tata was announced as the preferred bidder for that deal to close.

Matts Carlson, an automotive analyst at Sweden's Gothenburg Management Institute, said a deal between Ford and Geely would fit very well with both companies' strategies and follows the trend of automotive ownership moving east.

"We now see the Chinese as joint owners of Saab, we see the Chinese probably acquiring all of Volvo. We have previously seen Indian Tata buying Jaguar, so an entirely new world map is about to be drawn up," he said.

Volvo Cars welcomed the Geely announcement, spokeswoman Maria Bohlin said. "It's positive that it has been confirmed that there's a preferred bidder," Bohlin said.

Carlson expects Volvo production for U.S. and European markets to remain in Sweden and get a boost from the new ownership. He doesn't think Chinese ownership will hurt the Volvo brand.

"There is a humbleness from the Chinese that they actually don't know international, global auto development and production ... so I think they will separate Volvo and give it special treatment as a brand," he said. "Geely has much more to learn from Volvo than the other way around."

Geely, based in Hangzhou, China, said last month that it was considering a bid for Volvo Cars with an unnamed investment partner. The automaker said it has unspecified support from Chinese banks to fund the deal.

Geely is one of China's leading domestic automakers, and was among several Chinese companies that have shown interest in Volvo and other European car companies. The Chinese are eager to improve their competitiveness by acquiring foreign brands that might help them improve their technology and expand into overseas markets.

"Volvo's current factories, research center, trade union agreements and sales network will remain," Geely said in a statement, adding that it would expand Volvo's sales network and purchasing in China.

An independent management team would be formed, and the headquarters would remain in Goteborg, Sweden, the statement said.

"If the final agreement is reached, Geely will uphold and strengthen the traditional position of Volvo as a world brand, and will continue to promote the global reputation of the top brand in the field of safety and environmental technology," Geely Group board Chairman Li Shufu said.

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Associated Press Writer Malin Rising in Stockholm contributed to this report. AP Business Writer Joe McDonald reported from Beijing.