Does BMW want to buy Volvo?
Ford hasn’t said it’s selling, and it has been reported that BMW thought about buying, but then decided not to.
However, it appears that BMW actually is interested in acquiring the Volvo line from the Ford Motor Company. According to leftlane.com, BMW officials recently met in Sweden with the Volvo financial officers to get a better sense of the company’s balance sheet. Though Ford does not break out the profit and loss results of individual lines within it’s Premier Auto Group, it is generally believed that Volvo is profitable.
Though Ford has repeatedly denied that it has any interest in selling Volvo, sale of that brand would generate far more cash than the sale of the Jaguar and Land Rover lines. That Ford needs cash, desperately, is clear. The first act of its new chief executive officer, Alan Mulally, was to mortgage everything Ford owns, including the trademark blue oval, to arrange an irrevocable line of credit for almost $25 billion, apparently in anticipation of a cash drain over the next three years of $17 billion.
Borrowing that kind of money costs money. It makes sense for Ford to cash out Volvo to reduce the amount it must take out in loans. But Ford can afford to wait until it gets its price. Unlike the Jaguar sale, which is designed to cut Ford’s ongoing losses, Volvo’s not costing Ford anything. It is a premium line, with a sterling reputation – probably because most people have no idea that Ford owns it.
And it would be a perfect fit for BMW.
Though both BMW and Volvo have a reputation for building quality automobiles and the BMW line overlaps Volvo in price, the two makes attract different buyers. In a very real sense, though BMW must compete with Mercedes-Benz and Audi, there is no real competitor to Volvo.
Perhaps this is the real reason that the Ford family hired Alan Mulally to run the company. The former Boeing executive has no experience in the automobile industry. But he does have a great deal of experience in closing multi-million dollar deals and getting top dollar in the process.