Ford (NYSE: F) does not have much too much left to sell now that Jaguar and Range Rover are gone. Selling the Lincoln division might be a good idea. Nice luxury brand. But, it shares too many engines and parts with Ford brands.
All Ford has left that could be pushed out the door for cash is Volvo. Ford has said it will never sell the division, but desperate times call for desperate measures.
Word comes today from The Times, that Volvo may go to BMW to help the Ford balance sheet. The paper reports that "Ford may sell Volvo, the Swedish car-maker, to BMW as part of a drive to raise cash, say senior car-industry sources."
Ford might get over $2 billion for Volvo, which is about what it got for Jaguar and Range Rover. But, that amount would probably cover less that four month's cash burn.
The fact of the matter is that if Ford cannot get direct aid from the government in the next quarter, the entire company will have to be sold off in parts or in whole. The only two companies large enough to make a transaction of that size are Toyota (NYSE: TM) and Volkswagen. Toyota may not want to risk the U.S. government challenging it having 30% of the American car market if it made the acquisition.
No doubt Volvo ends up at VW.
Douglas A. McIntyre is an editor at 24/7 Wall St.
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Reader Comments (Page 1 of 1)
10-27-2008 @ 4:58AM
andrew abraham said...
All one has to do is look at their stock price or GMs stock price... we spoke about this on Myinvestorsplace.com
I do not think the word desparate can discribe the situation...
10-27-2008 @ 3:34PM
Robert said...
Even if their cash burn rate has doubled in the last few months, Ford has liquidity through at least 2009. By my estimates they will have $24B in cash and an $11B credit line that is untapped when they report in November. Ford is not GM or in a situation analogous to GM.
Your "fact of the matter" is not fact.
The question of selling Volvo depends on Ford's long-term outlook of the auto industry, Volvo's costs and Volvo's potential contribution to profit margins and cash flow in the next several years against what they can get for it today. I don't know that the equation is good for Ford to pursue sale. They'd have to get a good price for that equation to balance out right now.
10-29-2008 @ 8:28AM
LEV38 said...
Fact of the matter is that Doug is still a moron. In this particular bashing of Ford Mr. McIntyre uses facts that belong to Chrysler, and to a slightly lesser extent GM, and uses them as if they pertain to Ford. How does one conclude that a company with over $20 billion in cash and a substantial untapped credit line need a government infusion this quarter or it's all over? Only a moron would come to that conclusion. Thanks Doug, if for nothing else, you are consistent.