Chinese automaker Zhejiang Geely Holding Group expects to spend hundreds of millions of dollars beyond the $1.8 billion purchase price for Volvo Cars to make the Swedish car company profitable, Geely's chairman said Tuesday.
Geely is projecting a total tab of $2.7 billion for its takeover of Volvo, with money beyond the purchase price to be spent on expanding production, chairman Li Shufu told reporters.
Li said half of the total cost would be financed from overseas and half from within China, divided between Chinese banks and Geely itself.
In studying Volvo, Geely found the company had high research and development costs but made cars on a much smaller scale than high-end rivals Daimler AG and BMW AG, said Li. "We will find a way to let Volvo's technology play a better role and to expand their scale in order to lower the costs," Li said.
Geely's acquisition of Volvo from Ford Motor Co. has been heralded as breakthrough deal for China's auto industry, giving one of its most ambitious automakers a well-known, prestigious global brand and access to top-tier technology.
Li said Geely would not seek to impose its own corporate culture on Volvo but rather find ways to let the Swedish company exploit its strengths.
"Geely is Geely, Volvo is Volvo. Geely will not produce Volvo, and Volvo will not produce Geely," Li said. He compared Geely's and Volvo's relationship to two brothers, not to a father and son.
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