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As Volvo sale nears, questions linger

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As Volvo sale nears, questions linger

One is cooperation of 3 carmakers



With just days left before Ford-owned Volvo's likely sale to Chinese automaker Geely, big questions remain about the deal: How closely will the three companies work together in the future and for how long?

Ford, which acquired Volvo in 1999 for $6.4 billion, is expected to reach an agreement to sell Volvo as early as this weekend, according to a person familiar with the process, and arrangements are being made for an announcement in Sweden.

The Free Press has previously reported that the sale could be for about $1.8 billion.

Ford spokesman Mark Truby would only say that Ford still expects to meet its previously announced Wednesday deadline.

But even after the deal is signed, it is likely that Ford, Volvo and Geely will continue to work together for several years, said Michael Robinet, vice president of global vehicle forecasting for CSM. Ford and Volvo cars share common parts, assembly processes and technology, Robinet said. "Selling an integrated car division ... is like selling a room in your house. It is very connected and not easily separated," he said.

UBS Investment analyst Colin Langan noted that Ford sold Jaguar and Land Rover in 2008, but said unwinding Volvo will be more challenging. "Chinese automakers do not have some of the advanced technologies the automakers in developed markets have," he said.

Ford first said it would consider selling Volvo in December 2008 and named Zhejiang Geely Holding Group as its preferred bidder last fall.

In November, Ford reached a deal with Geely on the terms of Volvo's intellectual property but said final details still needed to be worked out.

Ford has lost millions on Volvo since acquiring the Swedish automaker and reported a pretax loss of $653 million on the brand in 2009.

Tim Dunne, director of global automotive coordination for J.D. Power and Associates, said selling Volvo will allow Ford to devote more resources to its core Ford, Lincoln and Mercury brands.

"It is less money than what they paid for it, but it's good money, and ... Volvo will no longer be diverting their attention."



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