Geely's UK investment fails, Volvo next?
The bankruptcy of Geely's UK investment could foreshadow a similar fate for its Volvo unit, which has been plagued by management turmoil and failure to execute a turnaround plan.
I suppose I should commend Geely for realizing that Manganese Bronze was probably unsalvageable at this point, and refusing to pump more money into this deeply troubled company. Still, Geely never should have tied up with Manganese Bronze in the first place -- a move that put it into the unfamiliar British market with a financial troubled partner.
Failure of this tie-up bodes poorly for Geely's much larger Volvo unit, which could easily suffer the same fate. Volvo itself doesn't release formal profit figures, since it is now a fully owned unit of Geely. But the company has been emitting a steady string of signals that indicate it is going through a period of turbulence under its Geely ownership.
All of these signals point to a company in turmoil, which I and many others predicted shortly after Geely made the purchase more than two years ago. Perhaps the biggest problem to date has been a difference in vision for Volvo between Geely and Volvo's Swedish executives. Geely wants to position Volvo as a luxury brand and significantly build up its presence in China, even though Volvo leaders seem to prefer retaining the unit's image as a more global, mid-range brand.
Perhaps these recent executive changes will finally bring some stability and unified vision to Volvo. But I suspect we'll continue to see more turbulence at the troubled Swedish unit for at least the next couple of years, perhaps leading Volvo to ultimately follow down a similar road to Manganese Bronze.
Bottom line: The bankruptcy of Geely's UK investment could foreshadow a similar fate for its Volvo unit, which has been plagued by management turmoil and failure to execute a turnaround plan.