Ford's Mulally Says Volvo, Geely Talks Continuing

(Adds analyst’s comment in the fourth paragraph.)

By Bruce Einhorn and Keith Naughton

March 18 (Bloomberg) -- Ford Motor Co. Chief Executive Officer Alan Mulally said talks to sell the automaker’s Volvo unit to China’s Zhejiang Geely Holding Group Co. are proceeding, rebutting local media reports the deal could be delayed.

“We are making progress on the negotiations,” Mulally said in an interview in Shanghai, without giving a time frame for when the agreement will be made.

Ford aims to sign a $2 billion deal to sell Volvo Cars to Geely by the end of this month, three people familiar with the talks said last week. Dearborn, Michigan-based Ford put Volvo up for sale in late 2008, part of a strategy of dropping European luxury lines to focus on its namesake brand. The China Daily said yesterday financing and technology transfer problems could delay the acquisition, citing people familiar with the matter.

“There is little chance for the deal to fall apart given that the two companies have both made a lot of efforts on the deal and have seen some progress,” said Vivien Chan, an analyst with SinoPac Securities Asia Ltd. in Hong Kong. Buying Volvo would give the Chinese automaker access to Volvo’s technology and “improve Geely’s image” because Volvo is considered a premium brand in China.

Ford ended three years of losses in 2009 by posting $2.7 billion in net income, its first full-year profit since Mulally came from Boeing Co. in 2006. Mulally has focused on refreshing Ford’s lineup, including adding more fuel-efficient small cars, while cutting costs. He reduced the North American workforce by about 47 percent and sold the Jaguar, Land Rover and Aston Martin luxury brands.

‘Great Brand’

Whoever buys the Swedish unit “are gaining a great brand,” Mulally said. “We will continue to support Volvo just like we did with Aston Martin, Jaguar and Tata.”

Geely, China’s largest private automaker based on 2008 sales, wants to gain insights into Western vehicle development and manufacturing through buying a mainstream European brand.

Mulally, 64, said he sees about 40 percent of global auto sales coming from the Asia-Pacific region over the next 10 years, while 35 percent will be in the European region and 25 percent in the Americas.

“We are going to invest whatever we need to support Asia- Pacific,” Mulally said. “It’s clearly the highest growth market going forward.”

Top-Selling Automaker

Ford gained U.S. market share last year for the first time since 1995 with new models such as the revamped Taurus sedan, while the predecessors of GM and Chrysler Group LLC reorganized in bankruptcy and received federal aid. Ford surpassed General Motors Co. last month to become the top-selling automaker in the U.S. for the first time since 1998.

Mulally broke ground in September on a $490 million small- car factory in Chongqing, Ford’s third assembly plant in China. Ford ranks 12th in the nation with 2.8 percent of sales, according to auto researcher J.D. Power & Associates. GM, which emerged from bankruptcy July 10, outsells Ford 3-to-1 in the country, building twice as many vehicles.

Ford gained 4.5 percent to $14.10 in New York trading yesterday.

--With assistance from Tian Ying in Beijing. Editors: Kae Inoue, Ian Rowley

With assistance from Stephanie Wong in Shanghai

To contact the reporters on this story: Bruce Einhorn in Hong Kong at beinhorn1@bloomberg.net; Keith Naughton in Dearborn, Michigan, at Knaughton3@bloomberg.net

To contact the editor responsible for this story: Kae Inoue at kinoue@bloomberg.net