Beijing: For a carmaker whose success is owed to its cheap compact vehicles, China's Geely Automobiles always seemed to operate with outsized ambitions.
Its plucky chairman, Li Shufu, named some of his models King Kong and Freedom Cruiser and he pledged to seize American and European markets even though his own brand fails to crack the top 10 in domestic sales.
Analysts have been scratching their heads over some of the automaker's decisions too. Geely bought a stake in Manganese Bronze, the makers of the iconic London taxis, with no obvious strategic goal. Geely also unveiled at a Shanghai auto fair last year the GE, the company's answer to the Rolls-Royce famously featuring just one seat in the rear — a massage chair, no less.
So it was with a mixture of scepticism and surprise when Geely put in a bid to purchase Sweden's Volvo from the Ford last year.
Geely is a company, after all, whose leading foreign markets include Venezuela, Iran and Algeria. Even Li described the courtship for Volvo as being "like a poor country boy chasing a top international celebrity."
Global player
With Sunday's finalising of the $1.8 billion (Dh6.6 billion) deal with a ceremony at Volvo headquarters in Sweden, Geely now stands in the forefront in China's designs to become a global automotive player.
China dethroned the United States last year as the largest auto market in terms of units sold. But the country is still largely a manufacturer of cars, not an innovator.
China's carmakers, Geely included, have been accused in the past of merely imitating foreign products. Chinese consumers even joke that Geely's blue-and-white logo looks like BMW's from afar.
Though the central government has made access to foreign markets one of the chief goals in its national auto plan, many experts believe that China is still far from delivering a globally competitive vehicle.
"It's still years away," said John Bonnell, a senior analyst for J.D. Power Asia Pacific. "They need to consolidate some companies, more [technological] development and more brand development."
Still, buying Volvo represents a major step forward. Geely, which means good luck in China, now has access to a team of researchers famed for their safety know-how — no small detail for a carmaker that showcased a sedan in Detroit four years ago that failed to pass US road standards.
It also garners distribution channels to leading countries in the West. More important, Geely now has a brand to compete in China's increasingly lucrative luxury-car market, which is expected to double in size by 2015.
Michael Dunne, an independent auto analyst, said the deal comes at a time when Geely was losing momentum and cachet and needed a boost.
"There's two ways of doing that. One is to methodically improve quality up price points, like Toyota and Honda did in the 1960s and '70s, or short-cut the process by buying a global brand. Geely decided that, overnight, it would be a maker of low-cost vehicles with a gem in their portfolio to help them tap into markets that would have taken years and years to develop."
Of course, questions remain. Volvo was a money-losing operation for Ford, and analysts wonder how Geely, with its limited international experience, will turn the company's fortunes around.
One obvious answer is shifting production to China to dramatically reduce labour and overhead costs. Though local reports say that a Volvo plant is being planned for Beijing, Geely said it will not close Volvo's factories in Sweden and Belgium.
Analysts say Geely must keep them open because Americans and Europeans won't trust Volvos made in China. In the deal, Volvo will be allowed to operate largely independently. It's unknown what role Ford will still play.
Technical assistance
When the Dearborn, Michigan, company bought Volvo in 1999, it applied its engineering to its new unit, which suggests that Geely will need some technical assistance from Ford.
"What Geely brings to the table is unclear," Bonnell said.
"A lot will depend on the interaction and relationship with Ford and what happens with R&D for the next models."
Boni Sa, an analyst for CSM Worldwide, said Geely should steer clear of interfering with Volvo for fear of weakening the Swedish company's image.
Geely cars are priced between $6,000 and $16,000. The Volvo S80 costs up to $100,000 in China.
"They will have to treat Volvo very carefully," Sa said. "Chinese consumers still see Chinese-made cars as low-cost vehicles. It's Geely that needs Volvo to upgrade its brand."
Another concern is Volvo's ability to compete against more established foreign luxury brands such as BMW, Mercedes-Benz and Audi. The premium cars have a large following among China's rich — many of whom are first-generation drivers and may regard Volvo as a family car lacking sex appeal.
"In the last several years, Chinese buyers of luxury cars have been ostentatious," Dunne said.
"They want cars that say, ‘Do you know who I am?' Maybe the second round of buyers will want a more subtle image."