Volvo Price Tag: $6b
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.
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.
$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.