Auto industry ponders Volvo's future after Geely merger

The Ford Motor Company officially delivered its Volvo assets to China's Geely Holding Group on Aug. 2, marking the end of legal procedures of the largest overseas merger of a Chinese private enterprise. As the first multinational auto enterprise in China, how far Geely Holding Group can go has recently became the focus of the auto industry.

Li leading a "dream team?"

The new management team of Volvo includes Geely Chairman Li Shufu as the chairman of the board, Hans-Olov Olsson, former president and CEO of Volvo, as the deputy chairman and Stefan Jacoby, former CEO of Volkswagen AG in North America, as the president and CEO of Volvo.

Li clearly expressed earlier that Geely will not directly interfere with the operations of Volvo and the company's management team shows that he did not break his word. In addition to five auto industry elites recruited from around the world, the members of the board also includes three representatives appointed by Volvo's labor union.

Li believes the only thing that the acquired enterprise needs to change is the assessment and incentives. Li also believes the most important thing he did is that he and the foreign senior officers from Volvo's management team jointly decided the new enterprise management system and the departmental and individual assessment method.

Analysts believe Geely obviously drew a lesson from the overseas merger of Chinese private enterprises. It stressed the equal relation between Geely and Volvo at the very beginning, allowing the Volvo staff to feel a sense of security.

It also repeatedly stressed that Geely will make efforts to enable Volvo to turn a profit as soon as possible. Meanwhile, Geely appointed a foreign executive with an excellent reputation as Volvo's CEO and promised to treat Volvo employees kindly. This has laid a good foundation for the recovery of Volvo, analysts say.

Will China's weak auto market produce adverse effects on Volvo's business?

Full story