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Business – Ford picks Geely for Volvo; Magna upbeat on Opel

LONDON/GRAZ, AUSTRIA: Ford Motor Co chose China’s Geely as preferred bidder for Volvo Cars while Magna said it still hoped to clinch a deal to buy a
majority stake in Opel from GM after a board meeting on November 3

The shake-up of a car industry pummeled by the deepest crisis in decades continued, as Italy’s Fiat readied for the November 4 presentation of the five-year plan it hopes will turn around struggling partner Chrysler in Detroit.

Top officials from Canadian auto parts maker Magna and GM’s European unit Opel said they were confident the long-awaited deal – which has been held up after last-minute EU competition concerns – would be sealed.

“I am convinced that we will sign the contract soon if the EU … agrees. We are very, very hopeful,” said Siegfried Wolf, co-chief executive of Magna, which is seeking a 55 per cent stake in Opel with its Russian partner Sberbank.

A source had told Reuters last week that there was still a possibility that GM’s board could opt out of a sale of Opel in favor of keeping the European carmaker.

The European Commission has been keeping a close eye on the transaction to ensure state aid is not misused for political purposes and was not skewed in favor of Magna.

Ford goes for Geely

US automaker Ford’s selection of Geely moved the long-running sale process of its loss-making Swedish unit Volvo Car Corp closer to a conclusion but said more detailed talks were needed before any final agreement. The announcement signals that intellectual property concerns which threatened to derail the deal last week may have been overcome.

Ford did not disclose a possible sale price, but media reports have put it closer to $2 billion than the $6.45 billion it paid for Volvo in 1999.

Meanwhile, Swedish automaker Saab Automobile’s fate hung in the balance, after the Swedish government said it would have to wait for a decision on guaranteeing a 400 million euro European Investment Bank loan granted earlier this month. Niche sports carmaker Koeniggseg is buying the carmaker.

China’s BAIC agreed in September to take a minority stake in Koenigsegg, easing some of the funding concerns around the proposed purchase.

And in a further sign of car industry turmoil, Russia’s government denied on Wednesday that it had approved a plan by troubled carmaker AvtoVAZ – which is 25 per cent owned by France’s Renault – to cut its workforce by a quarter.

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October 29, 2009 - Posted by | Uncategorized |

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