REPORT: American-led consortium to bid against Geely for Volvo
With General Motors and Ford both trying to divest themselves of underperforming operations that aren't core to their U.S.-based businesses, the automakers are finding things tougher than simply locating someone willing to write a check. As automakers have rationalized their operations, they have done a lot of platform and technology sharing among the brands under their umbrellas, making extracting individual marques a difficult business. Because automakers around the world are struggling, finding buyers is even more problematic, and the world's most willing bidders seem to be in places like China and Russia – locales where respect for intellectual property rights is dubious. The Beijing Automotive Industry Holding Co. bid for Opel was killed because of such concerns. Magna's bid has faced similar worries because much of the financing is coming from Russia.
The lead bidder for Ford's Volvo unit is currently Chinese automaker Geely, but Ford is apparently having second thoughts because it doesn't want to share too much of its technology with the potential buyer. A second potential purchaser has entered the picture, a U.S.-based group with backing from several private equity funds. The Crown consortium has reportedly offered less up-front money than Geely but made similar investment commitments to the Swedish brand. If things don't work out with Geely, Ford could turn to the American group, but no one is talking publicly right now.
[Source: Financial Times]
Reader Comments (Page 1 of 2)
DJ 10:03AM (10/05/2009)
Given how the Swedish government is opposed to the Geely bid, it wouldn't be surprising to see them provide some sort of backing or loan security for this bid.
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Jared 10:12AM (10/05/2009)
Private equity funds want to buy Volvo? They should give Cerberus a call, and ask them how the Chrysler acquisition for them.
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zamafir 10:58AM (10/05/2009)
agreed, this should end well
/sarcasm
Paul 11:47AM (10/05/2009)
Totally different comparison:
1) bloated company that needed to be drastically restructured and left all the good tech it had behind with BMW
2) small company that has a constant stream of new tech that Ford will still want access too. Additionally, look at the past three months sales numbers for Volvo - constantly in the green.
Its a great investment for a management group that wants to focus on it, but its neglected in the Ford stable.
John H. 1:56PM (10/05/2009)
Personally, I think these guys are looking for some really huge tax write-downs in the immediate future.
Also, I can't imagine that Volvo makes anything that any tasseled-loafer buyer might want for themselves...
Avinash machado 10:20AM (10/05/2009)
I wonder how many of these smaller brands will around in ten years time.
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John P. 10:46AM (10/05/2009)
Out of all the brands out there for sale, I think Volvo could be of great long term values for a smart buyer. Volvo just has to focus on being the best "Volvo" it can be and a sizable niche will buy.
I also think Ford would be smart to find a buyer that would be willing to share some technology and manufacturing capabilities. The fact they are a private equity fund doesn't bother me so much. That's my two cents anyway.
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Jared 10:50AM (10/05/2009)
Volvo is in a very difficult position in the market. They don't have the brand cachet of BMW or Mercedes. Without Ford, they don't have the resources to compete head to head with BMW, Mercedes, and VW/Audi. Their claim to fame was safety, but they have no significant safety advantage now over their European competitors. They surely don't have a sports-sedan/performance advantage over their European competitors. Their designs are unspectacular. And VW is coming at them from below.
Paul 11:48AM (10/05/2009)
Keep telling yourself that Jared - wait until the new crash test standards are enacted and check out who is the only brand with 5 starts anymore...
Temple 12:17PM (10/05/2009)
Its unquestionable that Volvo has a strong brand-name, especially in regards to 'safety'. Which may, or may not, be justified within the modern context of safe vehicles. But there is a strong resonance with the buying public.
Chinese cars, particularly Geely, have a horrible rating and reputation. Euro-NCAP have rated their vehicles 0 stars, with a 90% probability of dying within a crash.
An obviously easy method for Geely would be to buy a brand with the strongest safety reputation and utilize it to improve their own. Obviously, being that Volvo are built on Ford platforms, Geely will have direct access to this technology. Ford, its been revealed, is wary of having Chinese companies have full access to their proprietary technology due to prior indiscretions on behalf of Chinese automotive companies blatantly stealing and copying technology. An issue made harder by the fact that Chinese courts will side with their domestic companies in court cases of violation by industrial espionage.
Jared 12:56PM (10/05/2009)
Paul: How long have you been working for Volvo?
If you think Mercedes and BMW won't get 5-star crash ratings, then you've got to stop drinking the Kool-aid.
Paul 1:19PM (10/05/2009)
Mercedes and BMW absolutely will - but lets talk price points here.
The new S60 will be probably 10-15 less than a fully loaded 3 series.
You are comparing two lux brands with an entry-level lux brand.
It probably will be price competitive with the CC (taking into account the CC has an excellent starting price but balloons, quickly).
I am a Volvo fan, but certainly not an employee (and would be the first one to criticize the current S60's life cycle). But to think that any brand out there (including Merc and BMW) are not a year to 18 months behind Volvo in safety is silly.
Jared 1:54PM (10/05/2009)
BMW and Mercedes 12 to 18 months behind Volvo in safety? Um, no.
John H. 1:59PM (10/05/2009)
The problem is that "Volvo" doesn't mean anything anymore. Are they appreciably safer than other modern cars? No, absolutely not.
Are they a better value or wagon-maker? No, Subaru owns that market.
Do they do sports? Nope.
Are their ergonomics & such years behind current standard? Yup.
Like Chrysler, Volvo can die.
Paul 2:21PM (10/05/2009)
Umm no?
Thats all you got?
Then why is Merc's current big marketing push about their "new" lane assist and blind-spot systems referencing tech that has been in the Volvo stable since 07?
If you run them both into a brick wall at the same speed the results will be fairly similar, but that isn't the full component of it anymore.
MikeInNC 10:47AM (10/05/2009)
I really hope Volvo cars survives. They have a ton of potential with the new S60 and I'd love to see them in the hands of some capable enthusiasts that could revive the spirit of the P1800 in a true modern fashion (although I think the C30 is a pretty nice modern version already) and get them back in the business of building their "R" line-up.
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Rev Junkie 11:09AM (10/05/2009)
I'd hate to see the Chinese screw up Volvo's reputation for unending reliability and unimpeachable safety. And why Geely, of all makers? Just Google the "Geely GT concept" (on an empty stomach), and you'll see why the Chinese cars all have styling copied from someone else, because if they don't, it'll end up looking like THAT!
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jamie 11:30AM (10/05/2009)
Ford would be better off closing Mercury, and replacing the brand with Volvo. Both brands tend to attract similar customers, but Volvo unquestionably, has a better international cachet.
I wish Mulally thought of this before he let go of the English patient, Jaguar, also. Lincoln is dying on the vine and soon will be extinct.
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Yaroukh 12:26PM (10/05/2009)
+1
Rar 11:48AM (10/05/2009)
In Carmaker’s Collapse, a Microcosm of South Korea’s Woes
NYTimes
“Chinese company 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
According to logical step, if Chinese company get the technology they wanted, tehy will kill america auto industry. volvo workers in sweden will layoffs soon, volvo workers in sweden will replace by cheap pay chinese workers in China.
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