Ford Sale of Volvo Rumors Revived
By Michelle Krebs July 16, 2007Talk has heated up once again that Ford is selling Volvo.
Londonâs Sunday Times, citing unnamed sources, said the decision to sell Volvo, which is part of Ford's Premier Automotive Group (PAG), was made in the past two weeks, but that the timing of the sale had yet to be decided.
If Ford sells Volvo it would the final piece to completely dismantling the automakerâs European luxury collection, the Premier Automotive Group.
Ford insists it is not in talks with any potential buyers about a Volvo sale. In fact, Ford had said some weeks ago, when rumors emerged about Volvo being sold, possibly to BMW, that the Swedish marque was not for sale.
Ford's apparent reversal on Volvo may be due to a lack of interest -- and/or anticipated low sale price -- of Jaguar and Land Rover. Ford officially put Jaguar and Land Rover on the auction block with the outcome of its exploration expected later this month. The sale of Jaguar and Land Rover is expected to generate $1.3 billion to $1.5 billion. Ford sold Aston Martin in the spring for just over $800 million, with Ford retaining a small stake.
Analysts say Volvo would bring about $8 billion; Ford paid $6.45 billion for it in 1999.
Though denying that specific discussions over the sale of Volvo are taking place, Ford repeatedly has said all options are on the table as it constantly assesses its strategy.
And its strategy, at least in North America, hasnât been unfolding as planned. Sales and market share have declined faster than anticipated, and Ford is not meeting all of its targets in the U.S.
Ford mortgaged its future with a $23.4 billion financing package late last year to fund its turnaround. The carmaker lost a record $12.7 billion in 2006.
Fordâs PAG, when created in the late 1990s, was supposed to generate a substantial portion of Fordâs profits. It has done anything but. PAG lost $4.8 billion since 2004. Jaguar is to blame for most of the loss; Volvo is believed to be profitable.
Auto analyst David Cole, chairman of the Center for Automotive Research in Ann Arbor, Michigan, told the Detroit News over the weekend that if Ford's cash flow problems were desperate enough, selling Volvo might make some sense.
However, what makes a Ford sale of Volvo more complicated than the sale of Aston Martin, Jaguar and Land Rover is the fact that Ford and Volvo have intertwined engineering, design and manufacturing. Volvo platforms are used for numerous Ford models, including the recently introduced 2008 Taurus (formerly the Five Hundred).
Perhaps an arrangement like the Cerberus purchase of Chrysler is in the cards, whereby DaimlerChrysler retains about 20 percent of the new Chrysler. Such a deal would generate cash for Ford but maintain its relationship with Volvo.
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The U.S. auto maker including volvo engine parts, which reported its first profit in two years on Thursday, said it was conducting a strategic review of the Gothenburg, Sweden-based Volvo, the Local reported.
Rumors circulated for months that Ford would sell the Swedish manufacturer after the sale of Aston Martin and moves to sell Jaguar and Land Rover.
When AB Volvo anounced the sale of Volvo Cars, most Volvo owners I knew were going like : Hmmmm...Now what would an American want anything to do with something so European..? I supposed they just wanted to get their hands on something that have always been touted as "safe" all those decades, to see what made it tick (safely.? not that Ford were that bad..)
But owning something like Volvo and running it were two different things altogether. In my opinion (after owning three units starting with the 244, 240 and now 740 series) I can sincerely say that the cars made by Volvo were in fact as safe as any European made cars.
The only difference is that the car was made in a way to make you feel a "little" uneasy - so that you'll be more of a careful driver, and that, my friends, is pivotal. In any journey, most Volvo drivers hardly drift off to sleep let alone become bored of travelling, and that's when the "safety" button kicks in eg. taking a break. Combined with the fact that these cars posess a high degree of safety, the Volvo "Safety FIrst" name was forever mentioned.
Drive a Benz, and you could get too comfy. Drive A BMW and you're instantly transformed into an F1 driver. The only other car I feel will offer a little more than a Volvo would be an Audi.
Given the choice (and money) I'd have plunked for a 90's BMW 520i, followed by the Audi A6. But the Volvo was chosen base on the love of an enthusiast's mechanics, car structure (which always received admiring stares from others even when parked along side more luxurious cars) and the fact hardly anyone honks you. People just courteuosly move aside for you in a Volvo...go figure. Jokers like us could rant on forever about Volvo, and the car that could almost run forever.
No offence, but seriously, Ford, with all it's gung-ho, should admit that it needs "love" to actually own Volvo and not so much on the profit stats. For me, it would be great if Audi could get Volvo, but the best should be left to the specialists - AB VOLVO.
And to all Volvo owners, mail me if you think you've got that "loving" feeling...
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