Automotive News [sub] reports that the Swedish government is setting up the bailout smorgasbord for Volvo.
Sweden’s Industry Ministry state secretary Joran Hagglund said the government is due to approve an application from Volvo Cars likely to be filed to the European Investment bank (EIB) next month, financial daily Dagens Industri reported.
The government would guarantee 90 percent of a 5-billion-kronor (573 million dollar) loan, Hagglund said.
The remaining 10 percent would be secured from other sources.
Don’t look at me. So why is Sweden happy to go to serve-up plates of köttbullar for Volvo, yet won’t touch Saab with a ten foot stolpe?
Unlike GM, Ford has clearly stated they will take full ownership responsibility and guarantee capital flows to Volvo Cars until they have found a new owner for Volvo Cars,” Hagglund was quoted as saying.
In other words, Ford’s willing to put up the same amount of kronor again to cover Volvo’s on-going losses—until they can find a [Chinese] buyer. Or not.
FYI, “Volvo suffered a disastrous 2008 with a pre-tax loss of $1.46 billion. The brand’s global sales in 2008 were 359,000 units, down from 482,000 in 2007.”
Volvo may be a mess, but unlike Saab there has been ongoing product development.
Why would anyone want to buy Volvo?
Why would Ford invest more money in Volvo?
Don’t look at me. So why is Sweden happy to go to serve-up plates of kottbullar for Volvo, yet won’t touch Saab with a ten foot stolpe?
Because Volvo is actually an actively developed automaker, while Saab, depending on your point of view, either slaps chicken-king badges on Vectras, Imprezas and Trailblazers or provides surplus manufacturing capacity to GM to build European Cadillacs that one one wants to buy.
If I were the Swedish government, I’d throw my auto bailout money into an actual automaker, not a sticker-maker.
bluecon:Why would anyone buy a Volvo?
I’ve looked at Volvo cars the last two times I was buying a new car.
First time it was the S40 2.5t AWD, then the C70 hardtop convertible. First time around I wanted a small upscale sedan, didn’t want to swing the payments on a BWM, so I looked at Acura, Lexus, and Volvo. In the end I bought the Acura because it was a lot less, but came away throughly impressed with the S40 and the dealer.
The C70 convertible is one of the few 4 seat convertibles that is available with a stick, and it was a nicely screwed together car with lots of thoughtful convertible touches. I ended up with a Miata and kept the Acura, but again Volvo impressed.
If anyone buys a Volvo it’s because they saw a nicely designed, albeit generally dull, vehicle.
Isn’t Volvo trucks one of the world’s largest manufacturers? Is that part of Ford’s Volvo operation? If so, what they’re doing makes some sense.
Grog, no the trucks are independent. What happened was that Volvo once upon the time thought the cars where losing too much money, compared to all the money they earned trough the truck business. The cars drained the trucks. So, Volvo sold Volvo Cars to Ford, and continued on without cars as Volvo Trucks. So, the truck business has nothing whatsoever to do with this business anymore.
Volvo trucks is a seperate company…shacked up with Renault.
grog:
Volvo, the truck company, is actually a separate company that sold Volvo, the car company, to Ford.
I wonder if the Swedes are planning a shot gun wedding to put the Volvo family back together.
Government seem to be doing that quite a bit these day (heck GM and Chrysler may make it down the aisle yet!).
Volvo is to Saab as GM is to Chrysler.
Cherry?
John Horner :
February 24th, 2009 at 10:34 am
Volvo is to Saab as GM is to Chrysler.
Kind of, but not exactly. The Swedish government sees a potential in Volvo that no longer exists with Saab.
Even with a few bad years, Volvo remains viable with a strong (albeit dull) brand equity. It has a decent reputation for reliability to match its fabled durability; we all know the two aren’t always mutually compatible. Even if Ford’s stewardship hasn’t been wonderful, they haven’t destroyed the brand and Volvo was turning profit as late as 2006. In the right hands and with an upswing in the economy, Volvo can have a future.
On the other hand, Saab is a lost cause. Whatever it represented as little as 15 or 20 years ago has been bowdlerized into nothingness by the GM blanding machine. They haven’t made profits in 20 years. The cars once were built well, but always were and remain endless money pits. Now, the competition’s products are much better. Why would anyone select a Saab over an Audi, BMW, Lexus or Infiniti?
Saab is Swedish in name only. The negatives outweigh the positives. The Swedish government is being remarkably pragmatic and acting in the best interests of its taxpayers. I only wish our own government would do the same by getting past its own baggage with Cereberus and the UAW, growing a set, and coming to the same conclusion about Chrysler.
My first Volvo has been awesome in the 20 months I’ve owned it. I hope to be able to replace it with another when the time comes.
Despite the general feelings expressed here about Volvo not being as well known for safety research as they used to be, that feeling is probably not correct.
I have seen a TV program where the Svens smash up cars at the newish Volvo crash-test facility not matched anywhere else in the world. Perhaps it was in that show, or a magazine article, but the depth Volvo goes to to make sure that each engine they put in each chassis will not compromise the safety structure was quite fascinating. For example, the Yamaha V8 in the XC90 model was hard to implement, apparently, considering the standard straight six is nowhere near the same shape.
So there is probably a reason that the S40 is not as inexpensive as a Mazda 3.
These are desperate economic times. When car sales started to falter, I was surprised that Volvo and BMW were initially among the hardest hit. BMW seems to have sort of recovered with cheap leases, but poor old Volvo is on a slippery slope.
However, given the amount of good engineering that Volvo has produced, and the already sunk investment, I’m not too surprised the Swedish government sees value in the company. At the very least, they could rent out that crash-test facility to Chery and BYD for a start. Or even engineer other companies’ vehicle structures.
Sigsworth, Chery is a Chinese automaker – so it’s a play on words relating to the ongoing rumors that one of the Chinese car companies will buy some of the zombie-auto-brands wandering around the globe like chickens with their heads cut off (sorry for the mixed metaphor)
Glad to see that the Swedes have some good brains and hope that Ford can survive and keep Volvo as part of their company.
Ford has already had to sell off some of their ownership in Mazda, which is a damn sight bigger than Volvo.
volvo is an excellent car. the only major problem with the brand is that their models are overpriced by at least 20%. that’s probably a function of exchange rates and paying volvo workers a living wage. this puts them in competition with audi & bmw. they need to price volvo in acura territory if they want to compete.
as a used car, they are a very good value. when i bought my used v70 the price was slightly above a comparable passat wagon and slightly below a used outback. imho, it’s much better than both of them. my one criticism is that they’ve gotten overpowered and too gadgetty. nobody i know who drives one is interested in the larger engines that volvo has crammed in (sorry but piston heads are not the target audience).
I’ll echo the “great used car” buy statement. Got my S60 as a 2 year old car with 34K on it, and got it very, very reasonably. It is a quality vehicle.
“volvo is an excellent car. the only major problem with the brand is that their models are overpriced by at least 20%.”
That’s why they call them “premium cars”. The 20% is the premium you pay for the luxury of ownership and some percieved quality/engineering benefits. And that’s also why all the automakers want to be percieved as premium automakers, to make them able of charging that extra 20%.
Volvos are expensive, even compared to Acuras. The Acura TSX is a better buy versus the Volvo S40.