Blog: Dave LeggettVolvo - who's buying?

Dave Leggett | 1 December 2008

So, Volvo Cars is up for 'strategic review' over at Ford, all options to be looked at. Yep, as was the case with Jaguar Land Rover. It might sell, if it can find a buyer. The language being used is very like that we heard before in the JLR case, isn't it?

Here's a thought. Let's say Ford has looked into it and decided that while it would very much like some cash, it is less keen to completely dump another prestige brand that plays well globally. In fact, it would really rather keep it and can see that making it profitable again is achievable - at least when the market turns around. The problem for Dearborn is cash, right now.

Who would buy it now, though? Ford was lucky to pack JLR off to Tata before the global automotive market dived. A buyer now from the emerging markets looks unlikely. An established European firm? Er, hang on, they're all hunkering down, concentrating on existing operating costs and not exactly looking to add a loss-making division.

What's the game then? Well, there's nothing to lose in putting Volvo out there. Obviously, you just never know if there might be an oligarch with a few roubles going spare. But that might not be the main reason.

It might be a bit more subtle and applies pressure in Sweden. The message to the Swedish government today is that Volvo Cars is stressed, losing money and there's a great big for-sale sign in the window. It sends shockwaves through Sweden and the Swedes will not take kindly to the notion that a national icon is potentially being hawked around to buyers that might not be 100% loveable. There's uncertainty. People in Sweden won't like the situation. The government will be under pressure to show some form of action. 

That might mean a number of things. It could mean state aid (if allowable under EU rules, which are going to be severely tested over the next six months, I reckon), or that soft loans in Sweden are easier to come by for Ford, or even that the Swedish state might consider actually taking a stake or manouevering a proxy or another Swedish company to get involved. Those scenarios could conceivably bring Ford some welcome cash for little real downside.

In short, Ford has nothing to lose by putting Volvo Cars out there and seeing what washes up. I'm surprised it's taken this long to go public - which given Alan Mulally's predisposition for 'one Ford' and offloading other 'distraction' brands, actually suggests that Ford is very reluctant to let Volvo go, despite today's announcement. Or that 'quiet diplomacy' to let it be known that Ford might take an offer got nowhere. 

Of course, now I have said all of the above, either Renault or BMW will be getting the chequebooks out as I write. It's a knack I have.

SWEDEN: Volvo Cars and Saab approach government for aid

INTERVIEW: Steven Armstrong, COO at Volvo Car


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