Ford Not Jumping On $2.5 Billion Volvo Offer
The Wall Street Journal reported today that Geely has offered Ford $2.5B for Volvo, making the Chinese automaker the “leading contender” for the Swedish brand. Leading? Are there other contenders we don’t know about? According to the WSJ, “the offer is higher than Ford or outsiders had expected for a brand that has lost more than $1 billion in recent years,” and yet the latest news from China [via Xinhua] has Alan Mulally saying there’s been “no new progress” in the ongoing negotiations. Now don’t get it twisted: nobody expects Mulally to publicly accept this kind of offer within hours of being reported, but you’d think he’d at least send encouraging signs. Instead Mulally tells Xinhua, “Volvo is a good brand, but Ford will sell it in order to shift its main focus on developing the Ford brand.” Which is like someone on Craigslist talking about the sentimental value of an item with the words “or best offer” attached to the asking price. The fact that Geely has made an offer for 100 percent shows that they’re serious (that used to be a Ford negotiating point). So what’s Big Alan waiting for? Offload the money-loser, snag some cash and move on. The deal doesn’t look to be getting any sweeter.
More by Edward Niedermeyer
Comments
Join the conversation
In the long run.. This (Volvo) has been a GIANT failure for FORD. Nasser thought it would make Ford look great with PAG attached.. just as long as ya dont look behind the curtain. L.R was a mess. Jaguar was a disaster. And Volvo... they cant make a dollar from that mess yet they PILLAGED every frame and every safety / security feature it has to offer. SO in the end.. VOLVO loses on both ends. Maybe FORD is having misgivings about actually accepting FAILURE! The fact that they threw hundreds of millions / billions of dollars.. RIGHT OUT THE WINDOW.
You know, I am sick of people alluding to how Detroit ruined the Swedish makers. If Volvo and Saab had been so great as some on here seem to say they would have had no need to sell out. Fact is all GM and Ford did was postpone the enevitable failure of two niche automakers that by and large produced substandard products. Yes, the die hards will flame away here but anyone that says Saab built quality before the GM takeover has never owned a pre-GM Saab or is smoking something that is readily availible on the college campus they probably teach at. As for Volvo, they were somewhat better...but quirky FWD vehicle at BMW prices do not a successful auto maker make. Flame On.
I wouldn't be surprised to see Ford end up keeping volvo, they aren't in the financial position that they have to screw themselves to get the money. Geeley isn't after volvo per se but rather platforms and engines and without specific licensing agreements I don't think ford is going to trade thier new global B, C and C/D platforms and associated engines (as well as a US/Euro dealer network).
It never ceases to amaze me how many people think they can make a smarter call than the CEO of a big corporation when they don't have all the facts in front of them. I read that WSJ article last week and it made perfectly clear that the sticking point for Ford was that Geely wanted to leave behind all the pension liabilities, and Ford did not want to give up all their IP rights to the Chinese. $2.5Bn is small beer compared to those kind of risks IMO and clearly Mulally thinks it worthwhile to continue to negotiate.