Bids for Volvo expected around Easter, Chinese and Euro concerns reportedly in the running
Volvo has been struggling for a while now, and recently the Swedish automaker shed 6,000 jobs to stem the tide of red ink. To make matters more interesting, Volvo could soon be working with a new owner. Swedish newspaper Dagens Industri is quoting unnamed sources as saying Ford could rid itself of Volvo by Easter weekend. The interested parties are rumored to be Dongfeng Motor Group and Chongqing Changan Automobile Co, along with a "European constellation," whatever that means. Ford originally purchased Volvo in 1999 for $6.45 billion, but many industry analysts are predicting the Blue Oval won't get that much money in a sale during a global recession. The move would still bring Ford some desperately needed financial relief to help the 105-year-old automaker weather the recession. For the near term, Volvo is still losing money by the bucket, and it's working with the European Investment Bank to obtain a $568 million loan that would be backed by the Swedish government.
[Source: Automotive News - Sub. Req.]
Reader Comments (Page 1 of 1)
Kitko 8:51AM (2/26/2009)
Are we in for the Easter Bunny funeral?
Reply
DJ 9:07AM (2/26/2009)
The buyer will be the so-called "European Constellation" composed of the following:
The Swedish government with a 30% stake.
Private equity firms with a 25% stake.
A European automaker, either PSA or BMW, with a 30% stake.
And Ford will retain a 15% stake for the near term to continue using Volvo's R&D and platforms.
This way, no one is on the hook for more than a billion or two if everything totally goes to hell.
Reply
Tim 9:15AM (2/26/2009)
This makes no sense. Why would BMW want any of Volvo's inferior products? Where does the costs savings or benefits come in for them? Why would a consortium let Ford continue to use the platforms for free? I would rather have Ford pay me royalties for my technology like Mazda does with the 6 and 3 ( I believe).
F-22 1:08PM (2/26/2009)
Yeah, you are right about that, why would BMW want Volvo...the 2011 5 Series is almost done, it's probably late...
But don't worry, maybe EuroNcap will give a second chance to BMW (for the second time)
Tim 9:15AM (2/26/2009)
"Losing money by the bucket"
This is correct. Ford's cash burn is not much better than GM's. Talk about them being head and shoulders above the rest is comical. Ford has huge legacy costs that will put a drain on them for years unless the US government steps in with assistance. That said the many believe that Ford is more salvageable than GM or Chrysler. I am not sure why the US doesn't concentrate on propping up its strongest player rather than trying to keep two broken companies together.
Reply
Zip 9:50AM (2/26/2009)
I think China maker try to buy a Volvo.
But, Ford and Sweden goverment and Volvo labor union must see this news before selling volvo to China.
------------------------
In Carmaker’s Collapse, a Microcosm of South Korea’s Woes
NYTimes
“BOE got the technology they wanted. All we got was layoffs,” said Hwang Pil-sang, a Hydis worker."
“We trusted their promise to help us into the vast Chinese market,” Mr. Yang said. “In the end, they kept none of their promises, and they got what they wanted: our technology.”
http://www.nytimes.com/2009/02/24/world/asia/24seoul.html?pagewanted=1&_r=2&ref=asia
Reply
j 11:32AM (2/26/2009)
Too late, Ford already did that to Vovlo and other brands it acquired under its umbrella and then got rid of.
BigWill 10:30AM (2/26/2009)
If I were the Chinese government I'd dip into petty cash, buy Volvo ASAP, and ship all the technology back to China to start assembling Volvos with cheap steel and $1/hr labor. Then I'd distribute Volvo's safety technology to Chinese companies so their cars won't crumple in accidents like soda cans.
Conversely, the thought of a $12K Volvo C30/S40 or $16K S60 ought to motivate EVERYONE else to shut out the Chinese.
Reply
Alex D. 10:41PM (3/12/2009)
I honestly can not figure out why Ford wants to get rid of Volvo, they have come to rely on volvo for their engineering,safety features, design, etc. the list definitely goes on. I have actually been extremely proud of ford that they streamlined their portfolio recently, only having four worldwide brands.
Volvo itself has fallen on hard times recently, as has much of the U.S. automotive industry, but I had hope that ford would keep this brand in their fold. Alan Mullaly ford's current CEO has made some excellent moves and sold non-essential brands of ford for high prices before the credit market really tanked. every move he made up until now has been extremely intelligent, so I must think there is a major reason behind this divestment in Volvo.
I wish ford great lucky, their way forward plan seems to already be paying dividends. if not for this economic recession, the company most likely would already be profitable. excellent leadership and management, what a turn around from five years ago.
Reply