Last Year Volvo Might Have Gone For $6 Billion.
Now Ford Will Be Glad To Get $2 Billion.
Ford of Europe managed to make a profit in the second quarter, but couldn’t keep pace with the red-ink from Volvo, raising the pressure to find a buyer for the Swedish chronic loss maker.
Ford Europe’s pre-tax profits fell to €138 million in the second quarter, compared with $582 million in the same period of 2008. With many of Ford’s competitors awash with the red-stuff, this was an impressive performance, built on the booming sales of the Ka city car and the Fiesta which have benefitted from scrapping incentives.
Ford’s profits though were more than wiped out by Volvo’s losses of a pre-tax €231 million, almost twice the loss of the same period last year. In the quarter Volvo sales revenues dived 32.6 per cent to $2.9 billion.
Geely Automobile and Beijing Automotive of China are said to be interested in buying Volvo. Swedish investors are also being tapped for a sale.
Ford’s chief financial officer and former Ford Europe Chairman Lewis Booth said talks with potential buyers of Volvo were continuing.
“We’re not going to sell it at any price,” Booth told the Financial Times.
Presumably that means Ford is going to sell Volvo, but at a price it considers reasonable, rather than it treasures Volvo so much, it would never sell it, at any price.
Ford is said to want between $1 billion and $2 billion for Volvo.
Just over a year ago, when Ford was saying it wanted to hold on to Volvo, investment banker Merrill Lynch reckoned Ford could raise at least $6 billion if it sold the Swedish company.
Neil Winton – July 29, 2009