Volvo Cars Gets $800 Million Loan From China Development BankDorothee Tschampa
Volvo Cars, the Swedish automaker owned by Chinese manufacturer Zhejiang Geely Holding Group Co., signed a second loan agreement with China Development Bank.
The $800 million credit with a maturity in 2021 will be used to further develop products and enhance the capital structure, Gothenburg, Sweden-based Volvo Cars said in a statement today. The first drawdown of the loan is scheduled for this year, with amortization and terms that match those for a 2012 loan of 922 million euros ($1.25 billion), it said.
Volvo Cars has been struggling to restore earnings since Geely bought the manufacturer from Ford Motor Co. in 2010 for $1.8 billion. Chief Executive Officer Hakan Samuelsson said last week he is confident Volvo Cars will reach break-even this year after vehicle sales improved in the second half. Volvo has to make up for a first-half loss stemming from declines in sales and pricing, increased investments and currency effects.
Under the new owner, Volvo Cars laid out an ambitious growth plan to nearly double its sales to 800,000 vehicles by 2020. Deliveries will probably remain about unchanged this year from the 421,951 vehicles sold in 2012 and grow again next year, Samuelsson said on Nov. 22.
Volvo Cars is developing its own vehicle underpinnings to gain full independence from former parent Ford by 2017. Geely and Volvo Cars are also establishing a shared engineering center in Sweden to offer jointly developed vehicles by 2015.