Bloomberg reports that Ford is seeking $6b for its Volvo division, and is “counting on the strength of the brand to draw bidders”. Dearborn has hired JP Morgan to advise in the sale of the final remaining brand from Ford’s erstwhile Premiere Auto Group. But even with a Wall Street heavyweight easing the deal along, Ford isn’t likely to get anywhere near that much. “Anything other than a heavily discounted sale seems unrealistic,” says Ferdinand Dudenhoeffer of Gelsenkirchen University. “For a buyer it’s the best time that one could wish for. But it’s not ideal for Ford.” With the global players facing a sales downturn, Dudenhoffer figures that only cash-rich Chinese automakers, buyout firms, or a group of investors backed by the Swedish government might be interested at all. Bloomberg quotes a mysterious “person familiar with the situation” as saying Texas-based TPG Inc may be interested in Volvo. TPG, which has more than $50 billion of capital under management, was among four private-equity companies to make preliminary approaches for Jaguar and Land Rover last year before Ford sold the businesses to Tata Motors. SAIC and Dongfeng are among the Chinese firms that could bid on Volvo.
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Wait–a private equity firm might buy them? A Texas-based one, at that?
That’s a brilliant idea, right Chrysl…oh. Yeah.
Never mind.
If you want a Volvo with firepower you should consider this:
FH77 BW L52 – Archer
http://www.armyrecognition.com/europe/Suede/vehicule_artillerie/Archer/BAE_systems_LAND_Bofors_Archer_Artillery_001.jpg
“The vehicle platform is a modification of the Volvo A30D 6×6 articulated all-terrain hauler vehicle.”
http://www.army-technology.com/projects/archerhowitzer/
USD 1 to Ford.
USD 5.999.999.999 to retool and get it going again.
Maybe.
The favorite scenario in China has always been that a private equity firm (with quiet backing from China) buys, and then sells it off to the Chinese. I think they’ll take anything if the price is right. They need an accepted foreign brand to overcome the “Made in China” stigma. Why not Volvo? Volvo still has safety cachet. Unlikely that Volvos fail in crash tests. They make Volvos in China. Their Chinese operation is curiously unfazed about a sale.
Look at it through Chinese eyes: Anybody who breaks through the car export logjam will be a hero. No huge numbers needed.
Are their assets worth $6B – their sales sure aren’t.
As they say on Jalopnik, Crack Pipe.
$6B for an automaker that’s losing money as fast as they can build cars?
The S80 and S60 are getting pretty long in the tooth, and they aren’t selling. The S40 and C30 are nice, but they aren’t selling, either.
Volvo has some brand equity, for safety and durability, though the latter is fast disappearing.
$2B max.
Why didn’t they ask for infiniti dollars? Equally realistic.
By Edward Niedermeyer
Bloomberg reports that Ford is seeking $6b for its Volvo division, and is “counting on the strength of the brand to draw bidders”.
Really? Volvo a strength? Okay, some name recognition, sure. Safety, maybe, but is there really any distinction left?
However, how much will it cost to separate Volvo from the mothership? Unless you want to be tied to the Ford parts bin…
Bruce
I’m surprised. Anything worthwhile from Volvo has already been incorporated into mainstream Fords, often at a lower price point. Any sale would be, effectively, for the intellectual property rights for the logo, because there’s no way you could disentangle the two.
Any new owner would be in IP servitude to Ford for five to ten years, unless they’re planning to simply rebadge. And if they’re going to rebadge, what’s the point? Anything that made Volvos special has already been integrated into cars like the Taurus and Flex.
Sweden needs to take this into their own hands. Turning Volvo over to a Chinese owner would be nothing but bad news for Sweden.
I have a hard time seeing someone else than an already car producing maker of cars as new owners of Volvo.
1. Hedge funds don’t know the car biz. One needs deep pockets and a long perspective to run a car brand. Saab has been a loss maker for twenty years in a row, they have never made a profit under the GM umbrella. Volvo seems to be more bankable, but how much? Hedgefunds don’t have the means or the patience. Re Chrysler under Cerberus.
2. Volvo can’t stand on its own as a car maker. A new owner would have to be producing cars already. Without Ford backing up r&d and platform-sharing, could Volvo stand on its own? I don’t think so. Volvo could be a good complement to someone like Renault or BMW. Not so much for a texan equity firm.
3. Chinsese owned brands doesn’t have the cachet. Doesn’t matter how many brands they buy, they won’t cash in in another twenty years or so. It takes time to get respectable. Re the chinese owned Rover brand. Or is it the cars only? The point is, where is Rover now? Can’t seem to find any…
No, a new owner of Volvo would have to be in the car biz, buying the brand to extend their portfolio. Somewhere deep down, Volvo has a brand cachet. And it is bankable. But it would take a very long time and very deep pocket to make it possible. And it would only make sense to someone who has the need and the means…
Speaking of which, what happened to those talks about BMW? Haven’t heard anything since…
I recall that Swedish government already denounce plans to enter car biz and Volvo group declined Fords offer to take back its child.
Volvo would be great addition to Renault, but Renault in trouble of its own. Hedge funds are digesting their bank acquisitions and Chinese can buy Volvo and SAAB only if selling price will let them continue operation without addition cash injections. Both Swedish are not selling anything at the moment.
Please, please, please Ed: no more quotes from Dudenhöffer. The guy is a pest.
In just about every second mass-media article about the auto industry in Germany, lazy journalists use him as a source, calling him an expert. But when was the last time he said anything of any originality whatsoever? Empty pontificating, self-promotion: that’s Dudenhöffer, but not much more.
If Ford dumps Volvo…there goes all of their safety awards.
How much dod you think TTAC readers could drum up?
I mean, we could own our own car company!
All of Ford is only worth 6.81 billion (current market cap). All of it. No way Volvo alone (which has had recent sales drops in the US worse than the rest of it’s corporate parent) is worth 6 billion.
The S80 is actually new, I just don’t think anybody noticed. It looks pretty much like an enlarged S60, and isn’t particularly luxurious or enjoyable to drive. Hard to imagine why people aren’t dumping their 5s and Es for a Volvo.
The S60 is about to celebrate its 9th birthday, with no replacement in sight. The next gen was supposed to be based on the new Mazda6, but with a sale of Volvo, who knows what will happen there. I’m pretty sure that the only Volvo left on a Volvo platform is the XC90. Everything else is Ford based.
Volvo had real problems under the Ford umbrella. I remember when they wasn’t allowed to market their very good anti-rollower protection (partly structural, partly in the ESP-system) because Ford was afraid that would make their Exploders et al look bad. Way (not) to go.
I’m hoping for BMW, Dailmer or perhaps “the last sovjet state” (internal scandinavian joke) Norway – will buy Volvo. There was a oil for cars deal about to happen in the early 1980’s, but it “crashed”. Now Norway has a lot of money from oil – so it could be fitting.
As some of you might have heard, the Norwegians turned down buying 48 Saabs for 24 billion NOKs…
Saab Jas 39 Gripen:s that was.
Norway choosed Lökhead Martin JSF instead – “the american boys” are “selling” those for 18 billion NOKS for 48 planes. I write “selling” since first of that price is about half of what the USA will be paying per plane. And the JSF is far from finished. And these type of projects have a tendency to become x2 or x3 OR x4 more expensive than planned.
Let me tell you what will happen: Obama will have absolutely NO choise other than to scrap expensive defence projects. All money available will go to bailing out the Big 3, banks, just paying for current ongoing military activities, and then he’s promised a lot of social reforms. AND some tax cuts.
So in the end, I’m sure that Norway will end up paying some billion NOK:s for Saabs, but those will really be “born from the jets”.
If Ford dumps Volvo…there goes all of their safety awards.
For who, Ford or Volvo?
No, seriously. Anything that makes a Volvo a Volvo is already incorporated into the other D3 cars, excepting electronic crap like BLIS.
I like the current S80, V70 and S60, but I’d be hard pressed to spend the money on them when the Taurus and Flex are just as safe, only slightly less well-appointed and about a million times cheaper to keep running.
There’s no point to Volvo anymore. If they want to survive with their soul intact, the only hope would be nationalization and a quick shotgun marriage to Saab. Volvo under Renault, or worse, one of the Chinese makes, would be a sicker joke than RoverRoewe.
Imagine it: Woelwo, by SAIC. Doesn’t it just inspire confidence in you?
As a Volvo loyalist, I’m pulling for them. They have some good product coming down the pipeline (XC60, new s60), albeit overdue.
I suspect the $6bn price tag is a smokescreen to convince congress that Ford is doing all it can — and if someone wants to pay that much, so much the better for Ford. Volvo is so integrated into Fords operations that it needs to continue with them one way or the other — or just go away and have the brand sold for the worth of the label.
Please, please, please Ed: no more quotes from Dudenhöffer. The guy is a pest.
In just about every second mass-media article about the auto industry in Germany, lazy journalists use him as a source, calling him an expert. But when was the last time he said anything of any originality whatsoever? Empty pontificating, self-promotion: that’s Dudenhöffer, but not much more.
I find him kinda funny. In Germany, he’s to the car industry what Franz Beckenbauer is to soccer in terms of being an “expert”. Both hardly ever say anything that’s either new or of any substance, yet the media always seeks their opinion. There is sort of a satirical admiration going on.
But I also have to say that he in fact has done some important work. A couple of years ago, I was working for a big automotive bank that was about to revamp its provision system for the dealers, and some of Dudenhöffer’s papers (probably done by his minions though) were very helpful in analyzing the situation and drawing conclusions.
$6 billion is the showboat price. $6 billion is the price you’d put on Volvo if you wanted to tell a bunch of numbskulls in Congress that you’re trying to raise money. Meanwhile, you’re really thinking that you could badge-engineer your Fords and sell them as Volvos, or you could kill Mercury and turn your Mercury dealers into Volvo stores.
Or, you could channel up the year of 1976 or 1977 when Volvo and Saab were two independents who didn’t think they’d survive and were exploring a merger. But that was when we Yanks were all buying “personal luxury” gashogs like Monte Carlos and Cutlasses, and GM was in tall, tall cotton.