Volvo Price Tag: $6b

by Edward Niedermeyer

December 4th, 2008 10:38 AM

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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4 of 22 comments

Psarhjinian on Dec 04, 2008
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 [s]Rover[/s]Roewe. Imagine it: Woelwo, by SAIC. Doesn't it just inspire confidence in you?

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Wjo on Dec 04, 2008

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.

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Tom on Dec 04, 2008
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.

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Rod Panhard on Dec 04, 2008

$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.

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