They're Baaaaaaack: Changan Covets Volvo, Again

Words of wisdom spoken on the eve of the Shanghai Auto Show: "The longer the crisis lasts, the bigger the chance of failure or a scale-down of some American and European automakers." Words of wisdom from Xu Liuping, Chairman of Chongqing Changan Auto Co. on the sidelines of a news conference. "And that has provided a chance for entry by Chinese manufacturers." The Chairman politely omitted to add "for pennies on the dollar," but why stress the obvious. And guess who the Chairman's company is coveting? "Changan, Ford Motor's China partner, is among several Chinese auto makers that have expressed interest in the Volvo car brand, which the Detroit automaker is seeking to sell in an effort to raise cash," writes Reuters. "Asked about progress on a possible Volvo deal, Xu declined to comment, citing disclosure rules mandated by the Chinese securities regulator." Changan? Doesn't that ring a (wedding) bell?

Yes, it's the very same Changan that had been fingered by TTAC as a suitor for Volvo in December. Yes, it's the same Changan that a day later denied that there's anything to that story at all. Yes, it's the same Changan for which snapping up a distressed Volvo makes the most sense.

Quite possibly, Changan is the only auto company in the universe for which buying Volvo makes any sense at all: Changan is Volvo's joint venture partner in China. Changan builds Volvos for the Chinese market. Changan could immediately turn around and sell Volvos all over the world. Their current joint venture contract prohibits exportation, but once they own Volvo all doors are wide open.

And, yes, it's the same Changan that said in February it had signed a framework agreement with Autopark Mexico to start making cars in Mexico next year with an initial capacity of 50,000 units. Chairman Xu said Changan could sell cars to North America. From Mexico.

They would probably sell better with a Volvo nameplate and Volvo technology and existing Volvo homologation through an existing Volvo dealer network. What did we say when we announced the Chinese/Mexican tie-up last February? "Could come in handy for Changan's bid for Volvo."