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Monday, May 28, 2007

Ford Selling Volvo? Why?

According to a news wire story from Reuters, which picked it up from a Swedish newspaper, which got the news from an un-named Ford source, Ford is considering selling Volvo, and BMW is kicking the tires.

Uh, Whiskey Tango Foxtrot?

Ford doesn't report the Volvo financials separately, but the industry guess is that Volvo is probably the most profitable of the Euro-luxury brands. Volvo is also a leader in automotive safety technology, with a valuable portfolio of intellectual property. They are also a leader in environmentally friendly carmaking, another priority for Ford.

Would Ford really keep money-pit Jaguar and sell Volvo? And why would BMW want Volvo, after their sour experience with Land Rover? I am not sure I see how Volvo fits into BMW's portfolio--BMW's cars are sportier, and every bit as safe. They overlap considerably in price.

According to the news article, Ford could gain as much as $9 Billion on a sale of Volvo. That's a nice chunk of change, but then what? Ford would be left with a real hole in their product line-up, with no credible competitor to European luxury brands, with Jaguar being weak and too far upscale and Lincoln not yet a credible threat.

Man, those college professors and Vermont commies are gonna be pissed--BMW isn't what most of them would call a progressive company.


Bob said...

I just came across your blog and read through many of your older articles. As a Michigander who works in the public policy arena and one who follows the state of our auto industry, I appreciate your attempt to state the truth about the car industry.

In some of your other articles you agreed with Lutz's assessment that it would indeed cost $5,000 to meet CAFÉ standards. I appreciate and agree with your assessment. I also agree that despite the media announcements, Americans are NOT shifting to small cars. They ARE shifting away from truck-based SUV's.

From a pro-environment standpoint, I fear that increasing CAFÉ will not do anything for the environment. U.S. cars make up only 7% of the worlds emissions and any increase in efficiency will be minimal. The world-wide fleet of cars is growing so fast that any incremental increase in fuel efficiency will be eaten up by the number of less efficient autos already on the road and the growth in the number of miles and number of cars driven.

The effort to meet new CAFÉ regulations will also mean that precious R&D dollars will be taken away from research that could be used to replace the internal combustion engines and instead will be used to make existing engine types more efficient. Despite what environmentalists believe (which I normally like to consider myself) there is a limit to the efficiency of the IC engine. The laws of physics will kick in somewhere. It takes a certain amount of energy to move a certain amount of mass. There is no getting around it.

I will bookmark your blog.

Angelo said...


Anonymous said...

Why not scrap US Ford, bring EU ford to allmarkets and voila - problem solved. I have a Mondeo (-02) and that car is incredible to drive and even the new one is SO much better handling, quality and a better car than ANY US FORD!!! Don´t know why Ford gives their own people sh*t and us europeans the good ones!

Anonymous said...
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