Ford Is Asking Six Billion Dollars For Volvo

With their back to the wall, Ford is seeking billions from Congress and six billion for the sale of Volvo. No one is sure that they’ll see either event happen, but these are desperate times for Ford.

The fortunes of the Ford Motor Company may rest on two events: its pitch this month before Congress seeking billions of dollars in loan money as well as the sale of Volvo, its Swedish automaker. Ford has little control over the former, but much more control over the latter, a sale which could net Ford six billion dollars if the company gets its asking price.

Ford purchased Volvo in 1999 from the parent Volvo company when it became apparent to its Swedish owners that the automaker would need the help of a larger company to ensure its survival. Since then, Ford and Volvo have shared several platforms (along with Mazda, another Ford partner), Ford has incorporated many safety features, and Volvo still manages to sell more than 400,000 units globally.

Ford paid $6.5 billion for Volvo in 1999, therefore the selling price is within reason, though some analysts believe that Ford overpaid when they bought the brand. In a depressed market, Volvo may only fetch between two and three billion, but Ford has decided to be aggressive when selling the automaker. After all, the company needs cash and the Volvo brand would be a nice jewel in anyone’s crown, whoever that automaker turns out to be.

To expedite the sale of Volvo, Ford has retained the services of J.P. Morgan Chase & Co. to advise them. No one has stepped forward with an offer, but BMW is rumored to be interested in purchasing Volvo. In addition, several Chinese automakers could make a pitch for the company or perhaps Hyundai might make an offer to add the Swedish automaker to its portfolio. Right now it is all speculation – Ford has yet to make an official announcement about Volvo and may hold off until after it meets with Congress.

The Volvo sale could be a blow to Ford, but with its back to the wall it may be the only choice the automaker has. Though Ford insists that they have enough money to see themselves through until the end of 2009, the company is heavily leveraged, owing tens of billions of dollars to banks.

If the Volvo sale doesn’t take place and Ford’s plea to Congress falls on deaf ears, then bankruptcy could be the only option to help save the beleaguered automaker. A last ditch option

, but one that the Blue Oval may be forced to take.

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about the author

Matt Keegan is an automotive columnist for a pair of print publications and a web content provider for several clients including Andy’s Auto Sport. Whether purchasing transmission mounts or L.S.D., you can save money by shopping online today.

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