BEIJING—China's Zhejiang Geely Holding Group Co. Chairman Li Shufu said he continues to expect to complete Geely's effort to acquire Ford Motor Co.'s unprofitable Volvo unit but indicated the talks have hit a snag because of unspecified problems at Ford.
Mr. Li said the auto maker has "done everything [it] can to prepare for the deal in accordance with the framework agreement" the two auto makers signed in December to allow Geely to acquire Ford's Swedish brand. The ball is now in Ford's court, he indicated.
"We're ready to seal the deal," Mr. Li said on the sidelines of a ceremony to launch cooperation in automotive talent development between Geely and a company-affiliated university in Beijing. "If the deal fails, the problem is not on our side. We have not violated any part of the agreement."
Mr. Li said he still expects to complete the deal, but his tone was cautious. "The situation is changing constantly...and the process of the negotiation is very tough," he said as he sat for a break between speeches at Beijing Geely University. "We will put as much effort as we can. I hope the deal can be done."
Pressed to explain what "issues" Ford is facing in connection with the Volvo talks, Mr. Li said he doesn't know the precise nature of the problems and declined to elaborate.
Geely, one of China's biggest privately owned auto makers, is financing a roughly $2 billon bid for Volvo with a combination of cash, bank loans and funds from a small number of investors.
John Gardiner, a Ford spokesman, said in an email message that Ford's "position hasn't changed since 23 December last year. As Ford and Geely said at the time—and as we've continued to say—we expect to sign a sale agreement in the first quarter." Mr. Gardiner also referred to a statement made earlier this week by Ford's Chief Executive Alan Mulally that the process was still progressing.
The apparent delay in the Geely-Ford talks over Volvo follows the collapse of a deal by General Motors Co. last month to sell its Hummer brand to a Chinese manufacturer, Sichuan Tengzhong Heavy Industrial Machinery. Beijing Automotive Industry Holdings Co. also was rejected by GM last year as a final bidder of the Detroit auto maker's Adam Opel European unit. According to people involved in those talks, GM didn't pick Beijing Auto because it didn't want to create a future competitor in China, which surpassed the U.S. last year to become the world's biggest market.
Ford said in December that the Dearborn, Mich.-based auto maker moved a step closer to offloading its Volvo division after settling "substantial commercial terms" of the proposed sale. It had said the company expected a definitive agreement to be signed by the end of March and the sale finished by midyear.
At that point, financing of the deal by Geely had yet to be completed.
On Thursday, Mr. Li said his company had indeed encountered difficulties earlier in making financial arrangements for the deal but said the problems were resolved quickly.
The Geely founder, who is also its chief executive, said an unspecified number of investors withdrew from the deal at one point. They "were not so willing to be part of the move, but other banks were very positive and jumped in to fill the gap. We made a quick and effective adjustment in this aspect."
In November, a person close to Geely told The Wall Street Journal that the auto maker, based in the eastern city of Hangzhou, had developed a turnaround plan that would aim to sell nearly one million vehicles a year, up sharply from the about 400,000 vehicles Volvo sold each year in recent years. That plan centered on China but also set ambitious goals for Volvo's traditional markets of Europe and North America.
Under that plan, the person said Geely would build a new Volvo plant in China capable of producing 300,000 vehicles a year as it looks to draw on China's market potential and inexpensive labor to raise sales and cut costs. Geely also would set up a Volvo tech center in China to help Volvo speed product development and cut research-and-development costs significantly by tapping Chinese engineers for basic engineering tasks.
On Thursday, Mr. Li said it was difficult to discuss Geely's turnaround plans for the Swedish brand in details before sealing the deal first. He acknowledged, however, that the Chinese auto maker would definitely consider building a Volvo plant in China and noted Beijing and Tianjin were his "top choices."
"Where to build the plant is not that important. China is huge, and we can choose freely to site a small Volvo plant anywhere," he said.
