It’s an old truism that there are bargains around in recessionary times.
Volvo AB’s CEO Leif Johansson has told Handelsblatt that the truck maker is on the lookout for acquisitions despite the global financial crisis.
“I expect a new wave of consolidation,” Leif Johansson said, adding the company had not completed its purchasing list but declining to give details.
Past puchases of Renault’s heavy truck division and Mack in the US have helped the firm to grow before, Johansson notes.
Does Johansson have one eye on developments in Detroit?

As reported on just-auto, the Swedish government has already been involved in talks with the local subsidiaries of GM and Ford concerning prospects for the auto industry in Sweden.
Industry observers in Sweden have speculated before that discussions have taken place over possible ‘Swedish solutions’ to potential difficulties for Volvo Cars or Saab. A scenario that sees an auction for prospective Chinese, Indian or even Russian buyers would likely not play well among the Swedes (Rover’s experience in the UK presenting a worst case example).

Many see the Volvo and Saab car brands as an important part of their national heritage that has already been damaged under the faltering custody of failing Detroit firms.

Could Volvo Cars and Volvo Trucks be reunited? There would be hurdles. Where would Volvo AB find the huge resources needed for new product development? What about disentanglement issues with Ford? Or could Volvo AB effectively act as a financial provider and guarantor, working closely with Ford (which carries on providing some product, engineering and procurement support) – FMC also maintaining a sizeable stake in the new Volvo Cars Corp? It could be a complex deal to do.

Would Volvo AB want the hassle of being involved in the car business again (synergies with other parts of its business would be limited)? Maybe, maybe not. Volvo Cars is losing money now and its parent has probably never been more receptive to an offer than it would be right now. And with the right management Volvo Cars should return to profit when the global car market recovers.

There again, synergies with truck making are not huge and Johansson could probably see more attractive acquisitions for his business out there. But, there is that emotional/political element in the background…

Like many industrial scenarios and M&A possibilities being discussed as the auto industry takes a cold shower globally, it’s a notion that sounds considerably less outlandish now than it did just a few weeks ago.