Over the weekend, rumors surface that Ford (NYSE: F) was mulling a sale of its Volvo brand. The Sunday Times reported that decision to sell Volvo was made in the past two weeks. The paper cited unnamed sources, and suggested that Volvo could fetch around $8 billion.
It's no secret that Ford is in pretty dire straits, struggling to return to profitability, and the company recently swung to a negative net worth. Given all of these pressures, a sale of Volvo to raise some cash might be tempting.
Happily, Ford has denied the rumors, and investors should rejoice if it isn't true. Ford's less upscale brands are facing intense pressure from lower-cost Asian producers, and luxury brands like Volvo may represent the only place where Ford has a durable competitive advantage.
Looking at Ford, there's not a lot to like: The company has major cash problems and many of its brands aren't what they once were. While a sale of Volvo would temporarily help the balance sheet, the brand may be the company's best hope for a strong future.
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Reader Comments (Page 1 of 1)
7-16-2007 @ 8:38AM
The_Village_Idiot said...
Zak, are u suggesting Ford keeps Volvo? Holy Cow. Ford paid $6.5B for Volvo in 1999 and it's anyone's guess (since they don't break-out PAG brands) how much they pumped into the brand since (probably another $6B+). The Volvo brand is weak (outside the northeast) and should never been bought by Ford (really Jackass Nassar).
In case you haven't noticed, Ford's returning to core and will sell-out all of PAG (and maybe even Mazda holding) in order to fund the proposed big-3 healthcare trust (to move the current $114B healthcare debt onto the UAW). It's gonna happen and it could save the big-3.
7-16-2007 @ 1:40PM
timsweet said...
I think Ford needs to sell Volvo and should. I'm a stock holder and Volvo isn't really all that big out here in the west. I want to see them scale back and focus on their core set of products. All 3 of our US manufactures need stop deluting the brand and get back to basic. The trend as been too long been...instead of producing better and smarter - let's buy in the the competition and let them make us some money. It's proved in the long run not to be all it was hoped, not looks like it was only a mere stop-gap solution.
7-17-2007 @ 4:56PM
tlstubbs@hotmail.com said...
I'm involved with Volvo @ the retailer level. So, what do I know. Except, that being involved with Fix or Repair Daily (ford) is a night mare. What a mixed bag of confusion...I certainly hope volvo gets another ride from a real car company not just a home for over egoed dudes that have little real world auto experience other than 3-martini lunches...
tls
7-20-2007 @ 11:41AM
William Martin said...
I have just seen a segiment on CNBC about the plight of the Big 3. They say the new contract negoations with the UAW must contain drastic cuts in all benefit areas. Us other workers never even came close to the benefits they have always had. If we have gotten by all these years then they can to. You know, that is just so simple even my 8 year old granddaughter could understand it. These are only points to ponder.