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Volvo’s Still for Sale…

But does anyone want to buy it?

by on Jan.30, 2009

Prize for a new owner? Volvo's new XC60

Prize for a new owner? Volvo's new XC60

You may not be hearing much from the rumor mill, now that reports that BMW wants to buy Volvo have been quashed, but the Swedish maker is still on the auction block, according to Alan Mulally, CEO of Volvo’s American parent, Ford Motor Co.

That’s probably no surprise considering Ford’s dire financial problems. Earlier this week, the automer announced it lost $5.9 billion during the fourth quarter and has now run up more than $26 billion in red ink over the last two years alone.

During a conversation with reporters, Mulally declined to discuss the Volvo situation in any detail, but noted, at one point, that the Swedish maker’s management team was concentrating on turning the business around and said that Volvo would follow through with the launch of the new XC60, under the Ford flag, as planned this spring. Mulally also indicated Ford would continue to support Volvo’s effort to upgrade its product line. A freshened version of the S80 will come to market later this year.

However, Ford’s financial report indicated that Volvo is suffering mightily from the global recession. For the fourth quarter, the subsidiary reported a $736 million loss in the fourth quarter of 2008. Volvo’s revenue also dropped 35 percent, to $3.3 billion, and another drop is projected for 2009, even with the new XC60 and updated S80. In other words, Volvo accounted for 11 percent of Ford’s fourth quarter revenue but 12.5 percent of its losses, which Mulally admitted is clearly unacceptable.

Selling Volvo, though, is problematic. Who might be interested? The Swedish company is the kind of trophy brand that would appeal to incautious hedge fund managers or Indian tycoons, looking to stick it to their former colonial masters. Chinese buyers, who are supposed to be in the hunt, would drive a very hard bargain. And there’s little sign any Asian carmakers are seriously interested in acquiring ailing western companies — so rumors linking Volvo and Honda are probably a pipe dream.

As for the Europeans, they’re facing a fast-rising assortment of their own challenges, and don’t seem inclined to even sniff around, perhaps out of fear Ford would snap at any opportunity that came its way.

Bottom line: most observers believe that Volvo stays Ford property for months to come, perhaps even longer.

Check back with us on Monday, as drives the new XC60, and interviews Volvo Cars North America CEO Doug Speck.

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