For the last several months Ford has denied rumors that it preparing its Swedish Volvo brand for sale, but, in light of pending federal aid, the Michigan automaker has openly admitted that it plans to sell its loan remaining PAG brand. And now, thanks to an inside source, we now have an idea of what price Ford will affix to its Volvo brand.
According to Bloomberg, Ford will seek as much as $6 billion for the Swedish brand. That total nearly matches the $6.4 billion Ford paid for Volvo back in 1999.
However, that price may be a bit unrealistic in today’s tight credit market, according to Ferdinand Dudenhoeffer, director of the Center for Automotive Research at the University of Gelsenkirchen in Germany. “Anything other than a heavily discounted sale seems unrealistic,” Dudenhoeffer told Bloomberg. “For a buyer it’s the best time that one could wish for. But it’s not ideal for Ford.”
Volvo’s third quarter pre-tax loss of $458 million – up from $167 million during the same time period a year earlier – won’t be help Ford’s case, either.
Although no potential buyers for Volvo have been identified as of yet, there are a few likely candidates. The first scenario is that a private equity firm would purchase Volvo, similar to Cerberus’ acquisition of Chrysler. U.S.-based TPG Inc. could be the early frontrunner, having been one of four buyers vying for Jaguar and Land Rover, and having more than $50 billion in cash on hand.
The second scenario would see a Chinese automaker scooping up the Volvo nameplate. Not only would this give a Chinese automaker direct access the U.S. market, but it could also alleviate some safety concerns linked to Chinese cars as Volvo recently ranked first in an independent safety study. Chinese cars are notoriously known for performing poorly in crash tests.
Ford has yet to give a timeframe for the sale of Volvo and we’re sure there will be plenty more in the case’s development. Stay tuned.
12/04, 2:05 PM
posted by:
kingofjericho
Shouldn’t it read “that it plans to sell its lone remaining PAG brand,” instead of “loan remaining PAG brand?”
12/04, 2:12 PM
posted by:
Borat
LLN should know basics of economics: company is valued not based on safety margins of the products, but on number of products sold. Very few safe Volvos have been sold, ergo there is no way Volvo worth almost the same as before it was acquired and raped by FoMoCo.
12/04, 2:15 PM
posted by:
yarddog82abn
Good thing Ford got what they could out of Volvo, if the Chinese get a hold of it, and they manufacture the parts in China, you can throw safe’s car title out the window…
12/04, 2:20 PM
posted by:
howsmydriving
Why sell Volvo? Wouldn’t it be more fun just to kill it outright? You can’t put a price tag on fun.
12/04, 2:24 PM
posted by:
Mad_Jasper
“Shouldn’t it read “that it plans to sell its lone remaining PAG brand,” instead of “loan
remaining PAG brand?”
Freudian slip.
12/04, 2:32 PM
posted by:
mayer_ray_nagin
They could sell it to Ellen Degeneres
12/04, 4:11 PM
posted by:
Blakkarr
The VOLVO sell is not going to go through without a huge loss. That said, VOLVO would be a fine buy for anyone, even now.
FORD did a good job with VOLVO and it would be a shame to sell the company. If VOLVO could have been able to buy itself out, that would be the best option of all.
Frankly FORD should not be looking to sell VOLVO simply because they are going to regret it in two or three years.
It future will tell that selling and killing division is never a good move. It will also say that in buying a company it is critical that that company be maintained as if its own company so selling it entails little more than installing new execs and managers as needed.
12/04, 4:40 PM
posted by:
Lionwithoutpride
This will bite Ford in the ass. Volvo only ran into real problems as its popularity grew and people who do not understand the concept of what a Volvo is started making demands. It is not a performance brand whether that be real speed or real off-roading. It does not seek to win prizes for the appearance of its vehicles. Volvo sells safety and utility. The majority who comment on this site are car enthusiasts who do not seem to care that vehicles are made for more than just the tuner, racing, etc. crowd. There is a reason Toyota sells well despite the constant jeering from what seems to be a vast majority of commenters here.
I am in the camp that says Ford ruined Volvo by trying to take a near-luxury brand and make it luxury. Ford thought Volvos should be sexier. Ford thought Volvos needed to sell in bigger numbers to be viable (they may have been right on this one, but they certainly did not accomplish the task). To the naysayers who will say I am full of it (and I often am), I point to Subaru. Subaru is heavily advertising safety as Volvo once did (Volvo now spends as much time in their advertising on other attributes as safety). Subaru is also heavily advertising on Subaru’s environmental impact and the lifestyle of those who drive Subarus. As always, I could be wrong, but I think Subaru has filled the niche that Volvo used to fill. Ford will sell Volvo and the end result seems to be that a Chinese company will reap the same rewards from Volvo as Ford has-suddenly, the American market will open to the Chinese company because they WILL have vehicles safe enough to make it into the states AND you are selling them a dealer network. This seems utter idiocy to me; but, I am sure that I will be greeted with the typical, “so what? Volvo makes no money for Ford!” (which is b.s. since Ford can only claim vehicle safety awards thanks to Volvo tech-transfers to Ford’s products).
12/04, 5:10 PM
posted by:
acura_el2000
SET VOLVO FREE
12/04, 6:13 PM
posted by:
Get Real
Should read 6 MILLION dollars.
Who is going to buy a black hole that sucks cash ????
12/04, 6:59 PM
posted by:
tyler_is_aero_tt
I always thought Volvo was a pointless brand, except when it comes to safety. They are far too bland to compete.
12/04, 7:41 PM
posted by:
DrFill
Volvo falls nicely, and neatly, into the “Neither here, nor there, category
There are plenty of vehicles that provide state-of-the-art safety equipment, and sterling crash test ratings
25 years ago, they were unique to safety.
The competition has caught up.
They’re a one-trick pony, and now many has seen that trick elsewhere
DrFill
12/04, 8:12 PM
posted by:
jdasch1
Ford got what they wanted and not wanted from Volvo. They got Hybrid tech and safe body structure from them, but when you drive a Volvo, you say the same over and over again…”who would buy this noisy, bad fit and finish vehicle??” The sales people are snobs, and the product is expensive next to Lexus or BMW. If they can get millions not billions for Volvo…they should pull the trigger and move on!!
12/04, 9:06 PM
posted by:
1c3d0g
Bad idea, Ford.
12/04, 10:17 PM
posted by:
hateful83
Ford is in survival mode. I give them credit, they’re doing what they have to do to stay afloat.
12/05, 11:34 AM
posted by:
rubyroxy
Ford will be very sorry if they sell Volvo. Wait a couple years and see.
Cheers!