Filed under: China, Volvo, Earnings/Financials
Ford in further talks with Shanghai Auto to sell Volvo
The UK's Sunday Mail is reporting that Ford has returned to Shanghai Automotive Industry Corp. (SAIC) to make another pitch to sell Volvo. As we told you back in June, SAIC is one of the leading contenders to snap up Volvo. Although Ford had long maintained the Swedish automaker was not for sale, it recently admitted it was entertaining offers for the firm. Having paid $6.4 billion for Volvo back in 1999, it is believed that Ford is now seeking around $6 billion for the company. That's a lot of renminbi.Like the rest of the industry, Volvo is struggling in today's market with third-quarter sales down 24 percent. It has cut thousands of jobs and has even sought assistance from the Swedish government. Besides SAIC, Hyundai Motor Co. is still believed to be in the hunt for Volvo, as well as the Swedish government itself, although that seems unlikely.
If SAIC does end up in Chinese hands, it won't be their first experience building Volvos. The Chinese-market-only, long-wheelbase S80L is already being built at the CFMA Chongqing plant in China, but that is a unique partnership for now and it is unclear how the sale of Volvo to SAIC would affect that arrangement.
[Source: The Sunday Mail]
Reader Comments (Page 1 of 2)
logan 10:12AM (12/08/2008)
Dear God, what is the world coming to? Ford buying Volvo was bad enough, can you imagine what will happen to them with Chinese owners? Well, there goes the resale value on my C70...
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Hamud 12:07PM (12/08/2008)
Volvo couldn't have achieved everything they did since 99 if it wasn't the Ford investment.
tekd 4:35PM (12/08/2008)
Oddly enough if SAIC actually did buy Volvo my guess is that Volvo sales would go up rather dramatically. But indeed your resale would go down the toilet, since the sales would likely go up because Volvo would be a lot more competitive about pricing.
This is based on what happened to MG cars-they're now a LOT cheaper than they were before they got bought out (by Nanjing, which then merged with SAIC), since SAIC can now supply about 60% of the parts for the car.
Before that MG pricing was hilariously higher than imported competition, which isn't exactly great for sales or staying in business.
They're still assembled in England too, so I presume a similar arrangement would occur if SAIC purchased Volvo-SAIC would basically use their more efficient supply chain to help Volvo reduce costs, and then Volvo could probably lower their MSRP's by like 3-5K across the board.
ebm14 10:14AM (12/08/2008)
Why can't the Swedish gov't grow a set of _ _ _ _ _
and buy SAAB and VOlVO? Or at the very least, give them a loan. Doesn't that country have anymore pride
or have they become another England or America
with a fleet of foreign investors running everything?
Where is this world going? I feel sorry for your kids.
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Avinash machado 10:15AM (12/08/2008)
Just imagine, if this sale goes through, a brand famous for safety will be owned by a country known for some of the most unsafe cars in the world. Hope Sweden will nationalize Volvo instead.
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tekd 4:29PM (12/08/2008)
I find it ridiculous that people keep making these stupid claims about how if SAIC buys Volvo they'll suddenly have safer cars, etc.
First off, SAIC *ALREADY* has access to both GM and VW technology since they build their friggin' cars in China. On top of that they also own both MG and Rover's intellectual property (but not the Rover brand).
Plus their own Roewe 550 sedan is supposed to be a 5-star Euro NCAP crash test rated vehicle, so it's not like they're having problems designing safe cars.
Personally I don't even think acquiring Volvo makes all that much sense for SAIC since they already own quite a few brands at this point.
And anyways, the Indians own Aston Martin and Land Rover, so what's with the idiotic paranoia about the Chinese owning Volvo? Volvo's not even an American brand so it's already under foreign ownership so it's not like it's some huge ego breaker for the Swedes.
Geeky1 10:31AM (12/08/2008)
Ugh. Being sold to the Chinese is a fate worse than death. Sad to see a company that built some damn good cars go that way.
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Stingers 9:48PM (12/08/2008)
Don't sign them to it yet. Talks never mean certainty.
one tooler 10:42AM (12/08/2008)
Well, you guys now need to learn how to live with with Indian and Chinese in this world. You don't like it?
Volvo--> China,
Jagua and Land Rover--> India
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Affalterbach 10:53AM (12/08/2008)
This will be a turning point for Chinese companies. With Volvo's safety record being transferred to Chinese companies, they shall soon begin an invasion of EU and USA.
Bye bye domestics.
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mythicalprogrammer 11:46AM (12/08/2008)
While I'm not into Domestic (except for vette and cts), I hate to say it, if they go down they other countries will go down too! Ha! Take that China!
China, Japan, Australia, and many other countries will be screwed!!
So if we are in a recession and 3 million people is out of a job, our dollars will go down. Our purchasing power goes down. We ain't buying any more of foreign widgets (most from China and Japan). Then they will get screw too!! Muhahaha MAD (mutual assured destructions!!).
GO ahead and invade us!! We don't have the money to buy your expensive Vulva hahahaha. That's what you get for being a global market and depending on our mighty strong dollar currency!!
Oh wait, damn... those Russian will take over S. America with Hugo Chavez >_>;;
James 12:22PM (12/08/2008)
mythical:
Ummm... what?
Okay, You need to realize that the US isn't the only economy there is. Surely the US economy has rippling effects on virtually every economy in the world, but just to give an example, exports to the US account for only about 20% of Chinese exports, and exports themselves are less than 40% of China's GDP. So while that's a big chunk, that still leaves quite a bit of the Chinese economy that is not directly linked to trade with the United States.
...And what strong dollar? Up until it stabilized few months ago, the US dollar's value was dropping like a rock! You might pick up a New York Times before you make silly baseless comments like that.
And I'm not even going to address that Russia comment...
mythicalprogrammer 6:03AM (12/13/2008)
James:
Sarcasm doesn't work so well. I know the dollar is going down so hence, the comment about the other countries market will take a beating or the purchasing power of the dollar. I was merely pointing out that other countries depend upon our stronger dollar to drive their economy LIKE THE NIKKEI or JAPAN. BUT since our dollar tank they're screwed.
Aside from trading if USA tank how are we going to pay China back? Magic beans? 20% eh?
The point I was trying to make was Affalterbach comment of China invading USA with volvo after the big-3 die out. It ain't going happen because our purchasing power... You know what whatever. I don't care this is stupid if you didn't connect the dot from my sarcasm and my post with the original post then it all fine.
Mr A 11:38AM (12/08/2008)
I'm just a little confused with the image... we're talking China right? The don't use Yen.
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joe23521 10:28AM (12/10/2008)
I'm pretty sure it says Yuan, not Yen. Although the character should go AFTER the number, not before it.
LDMAN 11:39AM (12/08/2008)
Everybody talks about buying companies but more often that not when the deal is done some (not all) of the best employees have already jumped ship simply because they could afford (financially or professionally) to do it.
When BMW or Ford bought Land Rover a lot less people than expected bailed out because they were being acquired by "first rate or blue chip" manufacturers.
On the other hand when SAIC both MG Rover everyone bailed out and never came back because of the (perceived?) reputation of SAIC. Result? The latest MG or Roewe is nothing to write home about in terms of product or sales volume.
The point I am trying to make is that people in this business, at this level in the game are paramount and more important than the factories, blueprints, trademark, etc...
SAIC could end up paying a lot of money for Volvo, but without the people that made it what it is today, it will actually be worth less, much less.
As for Tata and JLR, I wish them all the best. The problem is not so much with India vs. UK; it is more a case of BMW and/or Ford typecasting J and/or LR into a strategy, role, and identity, product lineup that no longer fits the existing business model or company structure.
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Samurai Jack 12:01PM (12/08/2008)
I'm always amused when people get upset by Chinese and Indian companies buying things. In a free and open market items for sale can be purchased by anyone willing to pay. Governments distort this all the time, sometimes for good reasons. But there is nothing inherently wrong with Chinese or Indian companies buying western companies when they are offered for sale.
What is so special or compelling about Volvo that should prevent this sale from taking place? Volvo's safety technology, which is more or less freely available anyway through reverse engineering? Or the fear that these formerly third world countries will one day become even more competitive? Sorry but that's going to happen anyway.
Ford wants to sell to the highest bidder. That's all. It's not necessarily their place to be concerned with the larger geopolitical implications of the sale.
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Judy Zik 12:03PM (12/08/2008)
I think this is a pretty smart strategy. Ford doesn't really want to get rid of Volvo. They are just putting the for sale sign up for PR sake for investors and Congress. Plus it puts pressure on the Swedish government. Putting Volvo up for sale for $6billion in this market would be like putting you 5 year old car up for sale for it's original MSRP. If anyone is actually dumb enough to give them $6 billion they should take it and run. The more likely outcome is they wont find a buyer before the market turns around or the Swedes open their wallets.
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Ignition Unlimited 12:29PM (12/08/2008)
Good thing the Chinese use yen, according to the picture.
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Kotse 12:39PM (12/08/2008)
"..Ford is now seeking around $6 billion for the company. That's a lot of yaun."
Ho hum?! ;p
You mean "yuan" or commonly referred to as "renminbi" (CNY).
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