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Financial Crisis Marginalises Swedish Auto Makers

Volvo Said To Be Worth Up To $6 billion, But No Takers For Saab.

Ford said it is now looking for a buyer for Volvo, but the future of its Swedish compatriot Saab looks uncertain as its parent GM twitches in its financial death throes.

At least investors seem to think there may be buyers out there for Volvo, although the possible asking price varies by about $4 billion.

Nobody is talking about finding a buyer for Saab yet.

According to Bloomberg, Ford wants as much as $6 billion for Ford. Perhaps Deutsche Bank’s less than $2 billion valuation is closer to reality. When Ford was first mooted to be selling Volvo back in 2006, $8 billion was said to be the likely asking price.

Ford said it would “re-evaluate strategic options” for the Swedish company, which it bought from Volvo Trucks in 1999 for $6.5 billion. There has been no shortage of buying suggestions each time Volvo has been theoretically up for sale. Investors from Russia, China, Sweden, the Middle East and Renault have all been seen as vague possibilities. A couple of years ago the hugely rich Wallenburg family, which controls Swedish investment giant Investor AB, was reported in the local media as being about to launch a bid for Volvo Cars with Volvo Trucks. BMW has also been mentioned in the same breath as Volvo.

Volvo was thought likely to remain with the Blue Oval because of its close integration with the company. Volvo provides components for the Taurus and Sable in North America. The little S40 shares parts with the Ford Focus. The Ford Mondeo has much in common with the Volvo S80 and the Volvo V70 station wagon.

In the 3rd quarter Volvo lost a pre-tax $458 million. According to Deutsche Bank, Volvo will lose nearly $700 million this year.

Meanwhile Saab’s fate hangs in the balance, being one of the brands GM is said to be ready to cut loose. But there was some good news. Even though the Swedish government said it would not nationalise Saab or Volvo, it did announce a €2.36 billion ($3.2 billion) credit guarantee and emergency loan fund.

Neil Winton – December 15, 2008

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