Ford (NYSE: F) obviously needs to raise money. Even the company admits that it will run low on cash later next year. A bailout from Washington may help that, but no one knows if the funding from Congress will be adequate to offset losses.
So, Ford is considering selling its Volvo unit to its Chinese partner Changan Automobile. According to Reuters, "Changan president Xu Liuping held discussions with Ford and Volvo during last month's auto show in the Chinese city of Guangzhou."
If a deal is pending it says much about the future of the U.S. car companies and their relationships overseas. China's car market growth has slowed somewhat, but it is still the most promising nation in the world for finding increased sales. By selling Volvo, Ford would give up the chance of making money on the brand in China in exchange for what is likely to be $1 billion or $2 billion based on what Rover and Jaguar sold for.
It is also surprising that the Swedish government would not want to aggressively support local interests in buying Volvo -- a flagship of the country's industry.
But panic makes strange bedfellows.
Douglas A. McIntyre is an editor at 24/7 Wall St.
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Reader Comments (Page 1 of 1)
12-09-2008 @ 12:54PM
bt said...
Now here is a situation that could make sense to a few equity companies. Buy Volvo at a fire sale price, (1 Billion-2 Billion) get major concessions from all vendors involved, slash jobs and unnecessary overhead. Request Swedish government support and wait for this auto market to return to 15 million units per year. Potential profit in 3-5 years, 2 Billion Dollars.
12-09-2008 @ 2:37PM
Peter said...
According to Swedish media Ford wants 6 billion USD for Volvo. I don't think that's realistic but who knows? Russian and Chinese companies are interested...