Tell Us Something We Don't Know: Open Season For Volvo – In China

Bertel Schmitt
by Bertel Schmitt
tell us something we don t know open season for volvo in china

For months, TTAC followed the increasingly desperate attempts of Ford to sell Volvo to the highest, and, as time went on, to any bidder. We reported that Ford’s Volvo joint venture in China, Changan, along with the Indian company Mahindra and Mahindra were in talks about Volvo. Which led to nothing. We reported that China’s Geely was looking at buying Volvo. Which led to nothing. We reported that Daimler isn’t interested in Volvo, and neither is BMW. Everybody in the auto business knows that Volvo is for sale. Everybody, except Ford. For a long time, everything was denied in Dearborn. Last December, Mulally raised Ford’s skirt a little bit for a peek at the no longer very private parts and said that Ford “is considering strategic options.” Whatever those may be. Now, after there is not a soul left that doesn’t know that Volvo is for sale, Bloomberg reports that Volvo is for sale:

“Ford Motor Co., the only U.S. automaker to forgo government loans, will begin seeking buyers for its Volvo luxury brand next month and expects to draw bids from Chinese carmakers, said a person familiar with the plan.” Jeez, they still won’t admit it outright, and trot out the worn-out deep throats who must be hoarse by now from dropping hints for months on end.

According to Bloomberg, sales documents will be sent to prospective buyers in the middle of February. Chinese bidders may include SAIC Motor Corp., China’s largest carmaker, Chery Automobile Co., and Guangzhou Automobile Group Co. The prospects are playing hard to get. Zhu Xiangjun, a spokeswoman for SAIC, declined to comment. Chery spokesman Jin Yibo said the carmaker is “open to cooperation and joint investments with other companies.” Lu Sa, board secretary for Guangzhou, China’s sixth-largest automaker, said the company hasn’t made “any decisions on whether we will take over any assets from foreign automakers.”

Rest assured that all of the above, including everybody and their nephew’s kid sister, has already had intensive looks at sales documents, which had been circulated by investment banks for months. If the announcement means something, then that Ford hasn’t received any serious bids and is ready to do a fire sale at any cost. It has been an open secret in China that there is interest amongst Chinese auto makers to acquire a western brand with global reach. But it is also known that the Chinese are masters of the waiting game when it comes to price negotiations. Nobody is in a desperate hurry. As time goes on, more brands will come on the market, and prices will drop.

Ford has shopped Volvo all over the world, and hasn’t received any rapid eye movement. For the Europeans, Volvo is a nuisance which they would like to go away. The Indians are out of money. The Japanese have their own problems. So it’s back to China. Why would a Chinese company be interested in buying a brand like Volvo? Simply in order to unlock export markets. China’s homegrown exports have been lackluster at best, with sales going to offbeat markets like Iran, Vietnam, and Syria. Chinese brands suffer from negative brand awareness and disastrous crash tests that are readily available on Youtube. The Chinese government is getting antsy about the dismal exports and is prodding their carmakers to do something, including the acquisition of foreign assets. A relatively small brand with a high safety cachet like Volvo would be perfect – if the price is right. And looking at the above, Ford seems to be ready to give Volvo away for whatever Ford can get. It won’t be much.

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  • George B George B on Jan 24, 2009

    Contrarian view. If Ford can't raise cash by selling Volvo now, what does it cost to keep Volvo a few years? Unlike the other former PAG companies, Volvo was profitable before dollar devaluation exchange rate problems. Too bad they don't have North American factories to hedge against exchange rate problems. Side issue. What if Ford threw in the currently closed Atlanta Assembly or Norfolk Assembly plant in with a Volvo sale to deal with the exchange rate problem? They are both located in right-to-work states, but they are in urban areas and they were infected by the UAW. The transplants are usually out in the country. Is it cheaper in the long run to build a new factory in a rural non-union area or can existing factories inside cities be rehabilitated?

  • on Jan 25, 2009

    If I bought volvo the first thing I would do is take a workforce comprised of only Americans and turn that company around.

  • MRF 95 T-Bird Back when the Corolla consisted of a wide range of body styles. This wagon, both four door and two door sedans, a shooting brake like three door hatch as well as a sports coupe hatchback. All of which were on the popular cars on the road where I resided.
  • Wjtinfwb Jeez... I've got 3 Ford's and have been a defender due to my overall good experiences but this is getting hard to defend. Thinking the product durability testing that used to take months to rack up 100k miles or more is being replaced with computer simulations that just aren't causing these real-world issues to pop up. More time at the proving ground please...
  • Wjtinfwb Looks like Mazda put more effort into sprucing up a moribund product than Chevy did with the soon to be euthanized '24 Camaro.
  • Wjtinfwb I've seen worse on the highways around Atlanta, usually with a refrigerator or washer wedged into the trunk and secured with recycled twine...
  • Wjtinfwb Surprising EB Flex hasn't weighed in yet on it being the subject of a recall...