Posted by: Bruce Einhorn on February 9, 2010
Officials from Ford and Geely had hoped to announce the sale of Ford’s Volvo subsidiary to the Chinese automaker before Chinese New Year. With the Year of the Tiger roaring in this Sunday, it’s now unlikely they’re going to meet that deadline. According to this report by my Bloomberg colleague Keith Naughton, talks between the two sides have hit a snag over finances and other details such as the extent of Ford’s relationship as a supplier to Volvo after a deal. “They’re not only negotiating a sale, they’re negotiating a complete, intertwined relationship that will last for several years,” auto analyst Michael Robinet from CSM Worldwide tells Bloomberg.
The U.S. automaker could use a lift in China, the world’s biggest auto market. Although Ford is by far the healthiest of America’s Big Three, it’s an also ran in the Chinese market, where GM and Volkswagen are the strongest of the foreign players. The company has enjoyed a good run of late, with Changan Ford, a joint venture with Chongqing Changan Automobile, reporting a big increase in sales in January. As the Detroit Free Press reported on Sunday, that’s 12 months in a row of growing sales. Nice, but Ford still has just 2.6% of the market in China.
The company no doubt is hoping it stands a better chance in the other giant Asian market, India. On Feb. 5, Ford started production of a new compact car, the Figo, its first small car for India, in the southern Indian state of Tamil Nadu. When Ford announced its investment plans back in January 2008, the company had just 2.7% of the market. So the company has a lot of ground to make up in India, too, and there are plenty of other foreign companies also targeting India. But since the market is at an earlier stage of development than China, the American automaker probably stands a better chance of making some gains in India.