Harley Lover Posted June 25, 2008 Share Posted June 25, 2008 Ford talks with Chinese to sell Volvo Volvo says it will cut 2,000 jobs John Revill Automotive News Europe June 25, 2008 14:36 CET Ford Motor is in negotiations with a Chinese company to sell its Volvo cars division, the online edition of Dagens Industri reported. A Russian investor is also believed to be interested in acquiring the division, the report said. The Chinese company involved in talks is Shanghai Automotive Industry Corp., sources told Automotive News Europe today. A Ford spokesman said: "We have been consistently saying since the end of last year that Volvo is not for sale. We are focused on improving Volvo's business results." Ford's new major shareholder Kirk Kerkorian, with a 6.49 percent holding, has stated he would like to see the cash strapped U.S. automotive giant divest itself of Volvo which it acquired for 50 billion Swedish crowns in 1999. Ford's CEO Alan Mulally began a strategic review around a year ago with the sale of Volvo thought to be among his goals. However the company has denied this. A number of automotive companies have been connected with a purchase of Volvo over the last year, including Germany's BMW and Japan's Mazda. The Volvo brand has shown good growth over the last few years and has a revamped model line-up. Analysts believe Ford is holding out for a good market price. Volvo says it will cut 2,000 jobs Volvo Cars, owned by the struggling Ford Motor, said today it would cut 2,000 jobs across its operations in an effort to trim costs. Volvo said it planned to cut its work force by 1,400 white-collar staff and 600 blue-collar workers to offset the impact of a weak auto market and surging raw material costs. The company has long been struggling with negative currency swings, mainly due to a weaker dollar, as well as steep rises in steel prices, but recently the situation had worsened, it said. "Previously, this had been balanced with the help of cost reduction and efficiency programs," it said in a statement. "However, with a continued declining U.S. market, continued price increases on raw materials, and weaker market conditions in Europe, the situation has deteriorated." Ford in November took Volvo, which reported a first-quarter pretax loss of $151 million, off the auction block and said it planned to integrate its subsidiary more closely into purchasing and development efforts and that it would focus on improving Volvo's cost structure. Volvo said the staff cuts announced today were part of a scheme to cut costs by 4 billion Swedish crowns ($662 million). Most of the job cuts announced today would be carried out in Sweden with 1,200 employees given notice at its operations in Gothenburg on the country's west coast. With the merging of several NA and EU platforms, I can envision a reasonable argument for moving ahead with this sale. Also, if Ford can net the $6 Billion dollar figure that has been mentioned in the past, they might have to make this deal to ensure their ability to finance their ongoing turnaround in NA. Thoughts? Quote Link to comment Share on other sites More sharing options...
Blueblood Posted June 25, 2008 Share Posted June 25, 2008 Are they going to sell cars, or the entire company??? What will they do when there is nothing left to sell? Eventually you need to sell stuff that people want.. Quote Link to comment Share on other sites More sharing options...
RichardJensen Posted June 25, 2008 Share Posted June 25, 2008 Don't believe it. Believe it when Ford announces that they are selling it. The Ford family do not do things this way. Quote Link to comment Share on other sites More sharing options...
NickF1011 Posted June 25, 2008 Share Posted June 25, 2008 A Ford spokesman said: "We have been consistently saying since the end of last year that Volvo is not for sale. We are focused on improving Volvo's business results." Do we need to read anything past this line? Quote Link to comment Share on other sites More sharing options...
Ford Jellymoulds Posted June 25, 2008 Share Posted June 25, 2008 Ford done the right thing with Jaguar they were nothing but a leech on Ford from day 1, All car companies are a losing sales in Europe so Volvo is a liability but when the upturn comes you can be sure they return to profit. Shares surged today on the back of a big fall off in oil prices so things do change. Quote Link to comment Share on other sites More sharing options...
rmc523 Posted June 25, 2008 Share Posted June 25, 2008 Reading the article, this line stuck out to me: A number of automotive companies have been connected with a purchase of Volvo over the last year, including Germany's BMW and Japan's Mazda. When was Mazda connected to a Volvo purchase rumor? Quote Link to comment Share on other sites More sharing options...
NickF1011 Posted June 25, 2008 Share Posted June 25, 2008 When was Mazda connected to a Volvo purchase rumor? More importantly, what the heck would be the point of a Mazda takeover of Volvo? Quote Link to comment Share on other sites More sharing options...
pcsario Posted June 25, 2008 Share Posted June 25, 2008 Do we need to read anything past this line? Deja vu? Just replace Volvo with Jag. Quote Link to comment Share on other sites More sharing options...
papilgee4evaeva Posted June 25, 2008 Share Posted June 25, 2008 More importantly, what the heck would be the point of a Mazda takeover of Volvo? I... well... maybe... um... I got nothin. Quote Link to comment Share on other sites More sharing options...
rmc523 Posted June 25, 2008 Share Posted June 25, 2008 More importantly, what the heck would be the point of a Mazda takeover of Volvo? I agree. And then, thinking about it, technically, wouldn't Ford still own part of Volvo, since they own 33% of Mazda? Quote Link to comment Share on other sites More sharing options...
F150 Man Posted June 25, 2008 Share Posted June 25, 2008 Don't believe it. Believe it when Ford announces that they are selling it. The Ford family do not do things this way. BULLSHIT!! If I could only tell you how many times in my 32 years at the Ford Motor Company, that I have heard that company employees would "first be told"... before we do this, that, or fire your ass. Rather, I read about it in the Detroit News or Free Press first, then read the company spin latter. The Ford family is still wondering what happened to their net worth... As a matter of fact, when was the last time we heard from the family?? Billy has gone underground, and I for one fell like a red headed step child. Quote Link to comment Share on other sites More sharing options...
pcsario Posted June 25, 2008 Share Posted June 25, 2008 I agree. And then, thinking about it, technically, wouldn't Ford still own part of Volvo, since they own 33% of Mazda? My guess is they meant Honda or Nissan. Quote Link to comment Share on other sites More sharing options...
RichardJensen Posted June 25, 2008 Share Posted June 25, 2008 Ford did not privately negotiate the sale of: Aston Martin Jaguar/Land Rover ACH holdings The Associates Those stupid junkyards and repair shops Jac bought. They ALWAYS PUBLICLY ANNOUNCED THAT THE ASSET WAS FOR SALE BEFORE NEGOTIATING THE SALE. A public announcement of a sale is the only way you can be reasonably certain of drawing the best bid. THEREFORE, VOLVO IS NOT FOR SALE UNTIL FORD SAYS VOLVO IS FOR SALE. END OF STORY. Quote Link to comment Share on other sites More sharing options...
RichardJensen Posted June 25, 2008 Share Posted June 25, 2008 This is in contrast to GM which negotiated the sale of its Isuzu & Subaru assets without first publicly announcing that they were for sale. Ditto the majority stake in GMAC. GM didn't publicly solicit bids. There is a difference here. Unlike GM, Ford has a track record of announcing when an asset is for sale prior to actually selling it. Quote Link to comment Share on other sites More sharing options...
Michael Reynolds Posted June 25, 2008 Share Posted June 25, 2008 My guess is they meant Honda or Nissan. Well the fact that they can't even get the manufacturer right, goes to show how much credibility this article has. Until Ford discloses other intentions with Volvo, I simply can't believe that nonsense. Jaguar/LR/AM are entirely different animals. Quote Link to comment Share on other sites More sharing options...
ANTAUS Posted June 25, 2008 Share Posted June 25, 2008 Ford should be in the real estate and asset management business...it doesn't seem to be interested in building vehicles or car companies at the rate they are going lately. Mercury and Volvo don't seem to have much of a future. I guess it'll be Ford and Lincoln with an interest in Mazda. At first the excuse was "Well we have all these car brands so we share synergy between one another...Mazda will development I-4 and small car development, Jag will showcase technology, Ford will do V6-V8 powertrains..blah blah"... Now the spin is, "well we wanna get rid of all the brands so we focus on the core brands"... Hmm, if you couldnt do it with entire armies, you think you will with 2 brands? Quote Link to comment Share on other sites More sharing options...
pcsario Posted June 25, 2008 Share Posted June 25, 2008 (edited) Ford did not privately negotiate the sale of: Aston Martin Jaguar/Land Rover ACH holdings The Associates Those stupid junkyards and repair shops Jac bought. They ALWAYS PUBLICLY ANNOUNCED THAT THE ASSET WAS FOR SALE BEFORE NEGOTIATING THE SALE. AND THEY ALWAYS DENIED THOSE SALES BEFORE THAT, WHAT'S YOUR POINT? No one should write anything more because Ford's denials should be taken as gospel? Reporters were wrong about Jag and AM? They were the ones who clued Ford into selling those brands? Edited June 25, 2008 by pcsario Quote Link to comment Share on other sites More sharing options...
RichardJensen Posted June 25, 2008 Share Posted June 25, 2008 (edited) AND THEY ALWAYS DENIED THOSE SALES BEFORE THAT, WHAT'S YOUR POINT? No one should write anything more because Ford's denials should be taken as gospel? Reporters were the ones who made Ford consider all those sales? This article goes beyond suggesting that Ford is considering the imminent sale of Volvo. It asserts that Ford is actively negotiating a sale prior to seeking bids. That goes against the financial discipline that has been in place at Ford for years. Ford does not privately seek bids for assets like PAG, etc. Reporters, IMO, should be a bit more discerning about their sources. Go back and read Amy Wilson's coverage of Ford prior to the announcement of the sale of PAG assets. You won't see her asserting that Ford was negotiating the sale of those assets. Why? Because she doesn't rush to put every odd rumor that comes across her desk into next week's Auto News. Edited June 25, 2008 by RichardJensen Quote Link to comment Share on other sites More sharing options...
pcsario Posted June 25, 2008 Share Posted June 25, 2008 (edited) This article is based on another article from a foreign newspaper. The whole Mazda thing could be a mistranslation on their part, and couldn't be the only one. Besides it doesn't sound like Ford is shopping the brand around, that's only mentioned in the title, the content itself doesn't support that idea, for all we know the original article talked about how that chinese company or the Russian guy approached Ford first, and hey if they offered 6 billion outright, I could see why Ford would want to accept the offer and sell Volvo, that has always been the highest value most analysts have given it. No need to start a bidding war when someone is willing to pay your BIN price. ALSO, Ford might've learned something from the Jag/LR sale and might want to do things differently this time, if only to avoid looking desperate. Edited June 25, 2008 by pcsario Quote Link to comment Share on other sites More sharing options...
TStag Posted June 25, 2008 Share Posted June 25, 2008 I think Ford will sell Volvo because frankly they have no choice. According to recent reports Ford are trying to raise capital to ensure they have liquitity going into 2009 should market conditions continue to deteriate. Selling Volvo won't necessarly raise additional revenue because Ford will have to pay back some loans taken out against it but it would remove a managerial concern. Volvo has a lot of problems it's margins are too tight and frankly the competition is getting stronger. Volvo need a lot of new models and investment. Ford may be able to break even at Volvo but if things in Europe also down turn then Volvo may become a loss maker. Ford needs all business units making money to sustain the US business (and the company). Put in context Volvo is actually only at the start of a turnaround plan that could take 4-5 years to fully execute. Compare that to the much brighter situation at Jag where they are maybe a year away. If Ford wouldn't continue to take risks at Jag (with VERY profitable and growing Land Rover) then why would it continue to stick by Volvo? I've said all along that if Ford was willing to let Land Rover go then Volvo would follow. These reports do nothing but build on my view. Quote Link to comment Share on other sites More sharing options...
RichardJensen Posted June 25, 2008 Share Posted June 25, 2008 No need to start a bidding war when someone is willing to pay your BIN price. Sure. That's a plausible theory..... Assuming that some company is so stupid as to walk in and tender an offer for an asset about which they have only the sketchiest of information. Quote Link to comment Share on other sites More sharing options...
Michael Reynolds Posted June 25, 2008 Share Posted June 25, 2008 Put in context Volvo is actually only at the start of a turnaround plan that could take 4-5 years to fully execute. Compare that to the much brighter situation at Jag where they are maybe a year away. If Ford wouldn't continue to take risks at Jag (with VERY profitable and growing Land Rover) then why would it continue to stick by Volvo? I've said all along that if Ford was willing to let Land Rover go then Volvo would follow. These reports do nothing but build on my view. Jaguar's bright situation?? You mean the bright situation that had automakers tripping all over themselves to purchase the brand? Are we speaking of the same Jaguar? And LR, with fuel being as expensive as it is? Reality check much? Quote Link to comment Share on other sites More sharing options...
pcsario Posted June 25, 2008 Share Posted June 25, 2008 Sure. That's a plausible theory..... Assuming that some company is so stupid as to walk in and tender an offer for an asset about which they have only the sketchiest of information. Who said they don't? The article implies talks have been going on for a while. Quote Link to comment Share on other sites More sharing options...
NickF1011 Posted June 25, 2008 Share Posted June 25, 2008 Who said they don't? The article implies talks have been going on for a while. Yes, and like most of the rumor articles we see, it is heavy on implications and light on facts. I'll wait this one out. I wouldn't really care if Volvo stayed or went.... Quote Link to comment Share on other sites More sharing options...
TStag Posted June 25, 2008 Share Posted June 25, 2008 Jaguar's bright situation?? You mean the bright situation that had automakers tripping all over themselves to purchase the brand? Are we speaking of the same Jaguar? And LR, with fuel being as expensive as it is? Reality check much? Bright situation compared to Volvo. Once the XJ gets replaced then Jag's problems are over. They should move into making a sound profit. As for Land Rover, Autocar are claiming the following: - New LRX 3 door - New LRX 5 door - New 7 seat Freelander - Defender to be replaced with Toyota Lancruiser type vehicle and F150 style pickup truck!!! - $200,000 Range Rover (Land Rover to compete with Rolls Royce) - More upmarket RR Sport (Compete with Bentley?) - Discovery to slot into existing Range Rover price band Doesn't sound to me like they are worried. Look at the margins on cars like the RR and the volumes at the lower end (210,000 aim just for "Freelander family" inc LRX) Now compare to Volvo. Waifer thin margins, currency issues, loss maker, rush for new models (against LR evolution of models). Volvo is looking like it's going to bomb. That's why it's in a worse position than JLR. That's why it must go. If there was a logic to getting rid of JLR and Aston then there is more of a logic for getting rid of Volvo. It's that simple. Quote Link to comment Share on other sites More sharing options...
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