Ford to Send Volvo to the Chinese?

By Brendan Moore

06.25.2008

Every couple of months Ford declares that Volvo is not for sale; and they have to do this because another rumor of a sale has started.

The new one, courtesy of Dagens Industri, is that Ford is actively discussing the sale of Volvo to SAIC, the Chinese car manufacturer, at this very moment. Add it to the one that had a Russian investment group owned by one of the many new Russian billionaires buying Volvo from Ford this summer, or, BMW (on their second try) buying Volvo this year so that they can have a fourth brand.

The reasons that all of these sale rumors keep surfacing is that Ford’s financial position is growing more precarious by the day, Volvo profits keep dropping, and finally, Ford’s new activist shareholder, Kirk Kerkorian, thinks it would be a good idea if Ford parked Volvo in someone else’s garage as soon as possible.

Ford keeps saying that Volvo is definitely not for sale, but the doubters retort that given the circumstances, Volvo must surely be for sale, and the Ford’s denials are just part of the process to drive up the selling price as much as possible.

Meanwhile, back at the ranch, Volvo announced today that it cut 2000 employees from their payroll as a result of the financial losses they have suffered this year, as well as a gloomy financial outlook for the rest of 2008. Volvo is not getting hammered so much by declines in unit sales as they are by the milquetoast dollar valuation and the rising costs of materials. Volvo is probably losing money on a couple of models at this point as result of those market forces that are completely and utterly beyond their control.

Wouldn’t it be odd if Hummer and Volvo went to the Chinese in the next few months? Or for that matter, to the Russians?

It’s a world turned upside-down.

COPYRIGHT Autosavant.net – All Rights Reserved

Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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5 Comments

  1. I never wanted Ford to sell any of its brands, but with the present environment as it is it’s hard to argue “Why not?”

    The best fit for Volvo is clearly BMW. BMW is looking for ways to spread its R&D costs over more production. BMW is not adverse to FWD cars (see Mini). Keeping Volvo FWD means it doesn’t compete with BMW in the enthusiast’s mind.

    Of course, since I hope Ford doesn’t sell Volvo, another option is to use spare Ford North America capacity –God knows Ford has plenty of it– to build Volvos, thus minimizing the weak-dollar effect.

    For its part, Volvo needs new energy and direction in its advertising. (A woman walking away from her Volvo because the key fob detects an unwanted heartbeat? What a way to sell a car.)

    Volvo also needs to stop pretending its on a par with BMW, Mercedes and Lexus. It needs to position itself as a Euro version of Mazda, its distant cousin, and inject some personality in its design and engineering. What’s Swedish for Zoom-Zoom?

  2. If Volvo goes somewhere else, I hope it’s BMW instead of SAIC or a Russian company like GAZ.

    BMW could do great things with Volvo, and I don’t have confidence that reat things would happen to Volvo at those other companies.

  3. I remember some articles of 2007 mentionned then Renault was interested to Volvo which Renault denied like this one from Motor Authority.
    I know then Renault still isn’t interested but they might change their minds. Also another player might enter the fray to the bid like Fiat or Peugeot or even Mazda despite being owned at 25%-30% by Ford.

    As for BMW, buying Volvo might be for one goal, just a way to get rid of a opponent just like Citroen did with Panhard when Citroen buyed Panhard.

  4. Man, just stop the madness! No more ownership changes!

  5. I saw this one on Autoblog, Ford talks with Renault about Volvo.

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