Filed under: Euro, Ford, Volvo
A Swedish solution for taking Volvo off Ford's hands
Ford: "Volvo's not for sale." BMW: "You sure?"
Ford: "Volvo's not for sale."
Cerberus: "You sure?"
Ford: "Volvos' not for sale."
And so it goes. Another week, another rumor of a possible Volvo suitor. Ford's staked a lot of their future on Volvo technology, so it's understandable that of all the PAG brands, Volvo is the one that Ford's the most reluctant to sell. With whisperings flying as thick as 17-year cicadas, a Volvo insider has intimated that the brand's Swedish management would like to see Swedish owners return were a sale to occur. The Swedes are extremely proud of Volvo, even now there's a 3rd party set up after the sale to Ford with the sole purpose of looking after the name. Ready and willing to take up the reins, a consortium of Swedish investors, inventively named Investor AB, has already collected over half the estimated value of Volvo, and they're itching to get their brand back. Ford would retain a percentage, and the difference between what's already in hand and what Ford might ask would be raised on the Swedish stock exchange. In light of Ford's recent Q2 profit, Dearborn may just hold on to Volvo for now. The next time they're feeling the pinch, Ford would do well to remember that Volvo is the most salable piece of PAG, one that would actually bring a a decent price. We doubt they need reminding.
[Source: Motor Authority]
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Reader Comments (Page 1 of 1)
Dui 8:07AM (8/02/2007)
Investor AB used to be joint owner of Saab with GM before GM bought the whole thing.
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omar 9:15AM (8/02/2007)
This is exactly what is going to happen in the pending sale of Volvo. Ford will announce before September 2007 that Volvo is for sale, because For is at such a mega lost. Volvo is down, Jaguar is down, Ford is down, Lincoln is down for the month of July. Ford is streched out to its limits right now with funds and credits because of the presistant loses in the brand and family brands.
Ford best intrest right now is to sell Volvo to this private equity company and retain a small stake like that of Mazda and just maintain a tight bond with Volvo, but not having to worry about managment and funding. Ford will also benefit because they will gain profits from Volvo stocks and also prfoit from some of Volvo technology. Volvo will benefit the greatest with a sale from Ford ownership. Volvo will have access to a large csh reserve, they will be under Swedish managment, they will still have access to Ford platforms, and still have a large company like Ford around to help them out only when nesscecary though.
Volvo under its new ownership will florish because Investor AB is owned and runned by the Swedish family, Wallenberg. This family is one of the riches in the Kingdom of Sweden and will have Volvo core values at heart most of all, safety which is parmount, quality, environment, and to be the worlds most desired automotive brand. Volvo will be able to bring out new products because of the access to cash and without having to consult with Ford's European managment first. Volvo will also be able to revive its Kalmar finish plant, expand its current facilities in Belgium and Sweden, and open a new Volvo Cars production plant in Russia near to that of Volvo Trucks Russian plant. Under Swedish ownership Volvo wont have to worry about fluctuations on the dollar to the Euro while manurfacturing, and most of all Volvo wont have to use so many Ford supplies on the production plant. Volvo will use Skvode foundry to produce its great inline engines again with the exception of the V8 from Yamaha of Japan. All of the Volvo suppliers pre 1999 sale to Ford can supply Volvo again also, boosting the Swedish economy.
The sale of Volvo to Investor AB of Sweden is the best option to protect both the intrest of Ford and Volvo. This will ensure great success for all the companies in the sale.
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DJ 9:20AM (8/02/2007)
Apparently, Ford has been presented with a Mazda in reverse proposal for Volvo. Investor AB will pay Ford x number of biilions for 70% of the company and Ford will retain the other 30%. Win-Win for both. Ford gets an influx of cash it desperately needs, yet retains a significant stake in profitable company, which it needs more than it will admit. Much of Ford's European line-up was co-developed with Volvo. To send them off in whole would result in massive development costs going forward.
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JC3 9:43AM (8/02/2007)
BMW should buy Jag.Hire Pininfarina to design some sexy sheetmetal and sell them at the RR dealers. Then have BMW do all the ballsey german style bahn-burners.So Jag would be more differenciated from BMW and RR dealers would have another English marque to sell on the,ahem,low end.
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Robert 12:34PM (8/02/2007)
Well, Jag has some sexy sheetmetal coming in the XF, but this topic is about Volvo.
Right now, Ford doesn't need to sell Volvo. They don't even need to sell Jag and LR. They are NOT cash strapped. The execs sitting on a pile of nearly $36 billion in cash (having gained over $2 billion last quarter from regular operations!) at their Q2 earnings call basically said they can restructure while burning through less than half of this stockpile. Even if there is a mild recession between now and 2009, Ford could still have enough cash to right itself and keep the R&D engine moving.
The point of selling Jag/LR is to make sure Ford's and Jag/LR's fate is not intertwined. So, if Ford screws up, Jag/LR doesn't go under and if Jag/LR screws up, Ford doesn't go under. It's been a case of both directions since the day Ford got involved (I still contend the only reason Jag has not already been sold to a Chinese or Indian firm ala Rover is because Ford bought them in '89 and pumped billions into them to restructure, reduce costs, increase quality and boost efficiency).
The point of the sale of Volvo would be the same. It would also relieve pressure on Ford to produce another variation on each platform it develops and, now here is the key part, share risk in developing a new platform with a partner who, while tied to some extent, is an otherwise independent entity that could survive or fall separate from Ford. Much like Mazda.
Unlike Jag/LR where Ford is just looking to cover the liabilities of those brands, remove future liabilities and in the sale maybe make a little cash, with Volvo, Ford would need to get enough money in the deal to pay down the mortgage against the Volvo brand at a minimum. That's a lot of money, but if someone wants to pay it and let Ford keep 25-30% stake, then that might be the best Ford can make.
Let's repeat this one more time: Ford does not NEED the cash, but they WANT to reduce the commitment and liability that having so many design and engineering groups under one roof entails.
I think it is a fantastic strategy.
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omar 10:44PM (8/02/2007)
I completely agree with you thats why they need to sell Volvo to not have to worry about that commitment and management, only retain a small share to keep the technology and platform sharing.
volvo will do better off without Ford, they dont need them and were doing find before and and will do find after Ford. Power to the Swede's just a matter of time now tell the Wallenberg Family becomes the new 'Swedish' owners of 'Swedish' Volvo, not some American company like Ford. Everything for a sale of Volvo is ready, the executives at Volvo are ready for Swedish owners, the work force are welcoming the new managment, and the Wallenberg Family has generated over half the buying price of Volvo.
Dave 12:53AM (8/03/2007)
Volvo quality is suffering. Ford is ham stringing them to use less quality components. The C30 is about to be launched and it is full of problems. Ford is pushing them very hard to launch the car before it is ready, just so it looks good on paper. Which is a repaeat of the disasterous 1999 S80. And they are forcing them to price the C30 out of the market because they want profitability on all sides. But who wants a $24,000 hatch back? Look what happened to the A3 and BMW 318i.
The New S80 has many electical issues, wait for the CR issue to come out in October.
To save the brand Ford should sell it, but instead they will milk it dry like Jaguar!
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