Yom-yom-yooom, ze chocolad: Ford Unloading Volvo?

Ford in discussions with Chinese co to sell Volvo cars unit

Out of all of Ford’s purchases, I don’t think that Volvo was such a bad one. The brand has a fantastic reputation for safety and platform sharing amongst Ford and Volvo has been fruitful. However, when you build a recovery plan based on certain assumptions (such as x number of F-150 sales) and then find those very pillars of your pro-forma collapsing, well you’ve got to do something. Whereas Land Rover and Jaguar were easily classified as the “fat men in the lifeboat” and sent packing, Volvo has much more worth and therefore hopefully a much higher price tag.

Who would be interested? Chinese? Russian? German? Perhaps even an Indian company? Volvo represents a nice deal for someone looking to crack the US market. You’ve got that strong reputation for safety which would be a great asset for a fledgling company that may not have the best track record. There is a decently sized, standalone dealer body in the US—all the better to establish a beachhead in our market. Volvo’s existing lineup looks good with the only real problem being that they currently do not manufacture any vehicles in the US and therefore suffer the currency consequences.

You could pick up Volvo and continue to manufacture cars in Sweden, but also supplement with cars from your homeland. In addition, US manufacturing capability could be found by acquiring plant capacity from the likes of Chrysler, Ford or GM. What a great way to gain entry into the US! Of course, Ford would expect a handsome reward for its relatively healthy brand. That cash could continue to bolster Ford’s liquidity and help it to weather the difficult storm that many automakers currently find themselves in.

Additionally, I’m still not convinced that Sweden is capable of support two automakers. If someone were to acquire Volvo, could they also pick up Saab at a discount from GM? Consolidating the Swedish automotive industry could help with economies of scale. Of course, with the current platforms being so wildly disparate it would take some time for any economies of scale to be realized. The other option is that a Chinese manufacturer could acquire Volvo and a Russian or Indian company could pick up Saab, or some combination thereof.