Marriages in the auto business are typically disastrous. But Sweden’s Volvo and China’s Geely are making it work
Hakan Samuelsson, the chief executive officer of Volvo Car Group, is sitting in the master bedroom in the home of a suburban Stockholm family he’s never met. His company has rented the modernist three-story house of blond wood and whitewashed walls for the media introduction of Volvo’s new station wagon, the V60.
Alternating groups of American, British, German, and Scandinavian journalists crowd in for short question-and answer sessions. It’s Samuels son’s first and probably last bedroom interview, but he plays along. “You can lie down and relax,” he tells reporters, gesturing to the queen-size bed as a grin creases his craggy face.
Outside, light February snow flutters past willows and pines onto a silver V60 bathed in camera lights in the driveway. It was designed, like so many Volvos, for suburban families seeking safe, reliable transportation. But the peculiar setting for this press event is meant to suggest that today’s Volvo is a far cry from the Volvo of a decade ago, when it was losing money, selling fewer cars by the year, and watching its talent for design and engineering get watered down by then owner Ford Motor Co. Even the staid wagon, the embodiment of classic Volvo, has taken on a new look in the sleek, low V60. A Gear Patrol review called it— remember, this is a station wagon—“positively lust-worthy.”
The car wouldn’t exist, and Samuelsson wouldn’t be jawing with journalists in a stranger’s house, if it weren’t for a formerly obscure Chinese billionaire named Li Shufu. For a long time, Li was known mostly for building crappy little cars for Chinese consumers buying their first vehicles. In 2010, his Zhejiang Geely Holding Group Co. bought Volvo from Ford at a fire-sale price. Samuelsson became CEO in 2012, and since then Volvo has built an engine plant and two vehicle assembly factories in China, plus another assembly facility in South Carolina, while expanding research and development centres in Sweden and California. By the end of this year the company will have introduced nine models, essentially replacing its entire product lineup. For 2017, Volvo reported sales of 571,577 vehicles and operating profit of $1.76 billion—both records for the 91-year-old company—with revenue of $26.3 billion. Volvo recently selected Citigroup Inc., Goldman Sachs Group Inc., and Morgan Stanley for advice on a potential initial public offering seeking a valuation of as much as $30 billion.
Failed marriages litter the auto industry: Daimler and Chrysler, General Motors and Saab, Ford and Jaguar. This one appears to be working. And Li has pulled it off by both defying the stereotype of the meddlesome new owner and leaving his fingerprints all over Volvo’s transformation. Somehow, Volvo is still the Swedish brand that makes station wagons and prides itself on safety, yet at Li’s prodding, it has also become a leader in emerging technologies, taking on challenges that companies its size usually leave to GM and Toyota Motor Corp.
It’s part of Li’s grander plan to build China’s first global automotive company. In the past year, through various Geely enterprises, he has accumulated a 9.7 percent stake in Germany’s Daimler AG, maker of Mercedes-Benz, as well as 51 percent of British sports car maker Lotus Cars and 49.9 percent of Malaysia’s Proton Holdings. Zhejiang Geely also invested $3.3 billion in Volvo AB, the truck maker formerly affiliated with Volvo Cars, and acquired flying-car aspirant Terrafugia. Li’s adventures appear to have the tacit approval of the Chinese government, despite his being a private operator vying against China’s many state-owned companies. He declined to answer questions for this story.
As the most evolved piece of Li’s vision, Volvo offers the clearest indication of how he might achieve it. “He gave us balls again,” says Lex Kerssemakers, a top Volvo executive under both Ford and Geely. “It’s not that they came with a bag of money; actually the opposite. The entire turnaround of Volvo has been financed by Volvo’s cash flow. They left us alone and had the patience as an investor not to take our money but to reinvest it in a new product portfolio. We were close to being dead in 2010. And here we are.”
“Please beware alligators,” says the green-and-white sign on a freshly paved road leading to America’s newest auto assembly plant, 40 miles northwest of Charleston, S.C. “Do not feed wildlife.”
The complex, surrounded by swamp and forest, is Volvo’s first to build vehicles in the U.S. Later this year it will start producing S60 sedans for sale in the U.S. and eventually for export to China and other markets. In a few years the plant is expected to be expanded to allow for the production of XC90 SUVs, which would boost annual production capacity to 150,000 vehicles and double the number of workers to almost 4,000.
Continue reading your story on the app
Continue reading your story in the magazine
The Novo Abides
Mike Novogratz, former Goldman Sachs partner and the loudest crypto bull on Wall Street, has made and lost a fortune on Bitcoin. He’s still all-in.
Trump’s tariffs were meant to make the U.S. a safe option for businesses looking to expand. It’s not working out that way.
The Immigration Hackers
An Obama-era department of techies is working to streamline paperwork from inside the Trump administration. Results are mixed.
Letter From London, March 2029
A message from post-Brexit Britain about what the 2019 split from the EU hasn’t delivered.
Saudi Weighs More Bank Mergers
Gulf bank consolidation trend gathers pace with Saudi plans.
Money Markets Mixed Over Fed Rate Hikes
There is little agreement among commentators as to whether the Fed will continue to hike rates in 2019.
Hey, Paul Ryan, What's Up? Budget Deficits
The professed fiscal hawk leaves behind a legacy of unsustainable shortfalls.
Dell EMC Bullish On 2019 Outlook
Cloud and technology giant plans further expansion in the Middle East.
Artificial Intelligence Has Some Explaining To Do
Software makers offer more transparent machine-learning tools—but there’s a trade-off.
What Buffalo Got, And Didn't Get, When Tesla Came To Town
After $750 million in subsidies and years of delays, critics say Elon Musk hasn’t done enough for his solar panel factory
Women & Spirituality
MIRABAI BUSH is the author of Working With Mindfulness, co-creator of Google’s “Search Inside Yourself” program, cofounder of the Center for Contemplative Mind and Society and a founding board member of the Seva Foundation. She teaches contemplative practices, and has facilitated retreats, workshops and courses on spirit and action for over 20 years. To commemorate International Women’s Day, Mirabai spoke with PURNIMA RAMAKRISHNAN on March 6, 2021.
UNITY IN A WORLD OF DIVERSITY
BRIAN JONES explores unity in a world full of challenges and diversity. Through different analogies and his own personal experience with meditation, he finds effective ways to achieve unity through the silence of the heart.
DR. ZACH BUSH is a renowned, multi-disciplinary physician and educator on the microbiome as it relates to human health, the environment, and our interconnected future. Here he extends this worldview into the spiritual realm and the field of consciousness, so as to co-create a sustainable and regenerative future for all of us, and understand the role of humanity in the greater scheme of things.
What is Success?
DR. ICHAK ADIZES shares what true success really means and what is needed to find success in everything we do.
PROTECTING A MONSTER
AS ACCUSATIONS OF ABUSE MOUNT AGAINST POWERFUL HOLLYWOOD PRODUCER SCOTT RUDIN, A-LISTERS ARE UNDER FIRE FOR NOT TAKING STAND.
THE HAMPTONS' BIGGEST LOSER
This used to be his playground! Matt Lauer was a fixture in the tony Hamptons area of New York’s Long Island, summering with then-wife Annette at their $44.8 million waterfront estate.
BIG TECH STOCKS FLEX MUSCLES AGAIN AFTER A ROUGH WINTER
Big Tech stocks are flexing their enormous strength again, after getting knocked around a bit earlier this year.
Miranda's Baby Dreams: PUT ON ICE
The couple pause their plans to have children as the country singer gets back to work.
BEFRIEND YOUR MONEY AND REAP THE BENEFITS
What’s your relationship with money? Maybe your personal finances are like a distant cousin you barely think about — or an unsettling stranger you avoid. Or perhaps money feels like your enemy, frustrating you and rarely doing what you want.
Rihanna: PARTYING HARD WITH A$AP ROCKY
A HOPELESS PLACE