×

Volvo Perfect Test Case for Chinese Automakers

Now that Ford has officially completed the sales of its Volvo subsidiary to China based Geely Automotive, the world will be watching to see what happens with the famed Swedish brand.

volvo_grill_AP.jpg
AP

Relax Volvo fans.

If you think the Chinese are going to trash one of the most iconic brands in the auto industry, you shouldn't be too worried.

The folks who run Geely are smart enough to realize Volvo gives them an unique opportunity to step up to the world stage, and they are intent not to blow it.

So what can we expect from Volvo now that it's in Chinese hands?

In the immediate future not much will change. Geely will keep Volvo on the same course it's been headed the last couple of years. The main focus will be making a smooth transition from Ford to Geely and then integrating Volvo technology and know-how into the Geely operations.

The skeptics look at Geely and say the Chinese are not yet ready to run a global brand. I don't buy that. While I think the Chinese auto makers are still a ways from growing one of their own brands into a global competitor, Volvo is a completely different situation. Volvo is a strong brand with an established reputation and well regarded bench of engineers and designers.

"Geely is an established auto maker, not an investment firm with no track record running a car company...Geely needs Volvo to thrive" -Behind The Wheel, CNBC, Phil LeBeau

So why do I get a sense of trepidation from Volvo customers?

Blame it on the fear of the unknown and the fear the Swedish brand will suffer the same fate Chrysler did under its previous owners. Both are feelings I can understand. After all, when Cerberus Capitalbought Chrysler the new owners said the same thing we are hearing from Geely. Essentially, "Trust us, we're going to drive this company for long-term success." Well we all know how that worked out.

Geely is a different situation. For starters Geely is an established auto maker, not an investment firm with no track record running a car company. Also, Geely needs Volvo to thrive. With an established dealership network, Volvo has a distribution network it can tap as it expands its Chinese brand—around the world. Finally, with the auto industry increasingly tilted toward China, Geely needs to leverage Volvo to stay ahead of hard charging competitors.

Funny, a little over a decade when Ford bought Volvo, there were fears back then that the Dearborn auto maker would ruin the Swedish brand. While the marriage never blossomed to the degree Ford envisioned back then, Volvo didn't die or become irrelevant.

__________________________

Click on Ticker to Track Corporate News:

- Ford Motor

- Toyota Motor

- Nissan

- Honda Motor

___________________________ Questions? Comments? BehindTheWheel@cnbc.com