Blog: Dave LeggettBMW and Volvo?

Dave Leggett | 11 May 2007

That's an interesting report today about BMW considering the acquisition of Volvo Cars earlier this year. How serious were they? It's true that there might be a degree of complimentarity in the brand positioning even though the brands are both high-end: BMW = sports, dynamic, driving pleasure, Teutonic efficiency; Volvo = safety, environmental conscience, Swedish compassion.

It would also give corporate BMW AG a more socially responsible and softer image perhaps, the hard edges smoothed over a bit. And underneath that fairly well defined surface differentiation in the brands' values there could be the usual savings on procurement and engineering.

But BMW is still doing pretty well even if profits are turning out to be lower this year. Does it need the integration hassles of acquiring another firm? Wouldn't the shareholders look askance at the mere suggestion, memories of the Rover debacle not exactly extinguished? I reckon so.

There would have to be a very, very compelling case for buying Volvo and I'm not sure that's there.

There might have been some discussion at BMW though. It could have been something that popped up in a brainstorming session, or strategic scenario analyses that also considered lots of other things - none of it actually serious or ever going to the Board.

But there's also no harm done in extracting every last ounce of information you can out of a competitor and fellow car manufacturer under the umbrella of an 'initial expression of interest' that is not for the public domain. That's part of the game.

Anyway, now PAG is making money, I think those brands are staying put unless the whole FMC turnaround train comes off the rails (unlikely). Aside from making sure that the BMW brand has the right model mix, BMW still has to make Mini work on step-up higher volume and that brand is about to enter a crucial phase with the addition of the bigger model. Plates are very full in Munich (and Oxford).

UK: BMW ran rule over Volvo - magazine


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