Volvo is still
The "potential stock" in the Ford brand
Among Ford's already sold brands, whether Aston Martin, Land Rover or Jaguar, they are all long-term deficits. Selling them is a “liberation†for Ford. However, although Volvo had a loss in the first quarter of last year, it is still a "potential stock."
According to Volvo’s 2006 financial report, the group’s total profit for 2006 rose from SEK 13.11 billion in 2005 to SEK 16.31 billion, which was a year-on-year increase of 24.4%. The Group’s annual sales revenue was SEK 248.14 billion, which was an increase of 7.3% year-on-year. However, since 2007, Volvo has begun to show signs of losses, with a loss of $151 million in the first quarter of 2007.
In June of this year, Sweden’s Volvo Car Company made the largest lay-offs in history in order to save money, cut 1,500 employees, canceled employment contracts with 500 consultants, and dismissed 1,500 employees including 300 overseas employees.
At the same time, in order to cut costs, Ford cut its annual output of Volvo's plant in West Sweden by one-third, from producing 60 cars per hour to 44. In addition, Volvo plans to reduce the number of dealers in the United States from 350 to less than 300 by 2010.
Selling point: leading technology
For Volvo, the biggest advantage lies in its technological leadership. In the eyes of the world, Volvo is simply synonymous with safety. The Volvo company also announced recently that they have set new goals in the field of vehicle safety and are actively developing an active safety system, hoping to achieve "zero casualties" in car accidents by 2020.
This is the biggest reason why Ford hasn't let go of Volvo. It's also the biggest selling point for bidders.
Difficulties: complex relationships
However, Volvo has a certain position in Ford's overall platform strategy. Ford needs to completely divest itself, not as simple as Jaguar and Land Rover.
First of all, it is not easy for Ford to rationalize Volvo’s relationship in the group; in addition, the Volvo S40 and Ford Focus have already been shared in certain aspects. For example, in China, the two models are co-produced. In Europe, these two The models also achieved partial parts sharing. Therefore, if Ford wants to sell Volvo, it still needs to straighten out the relationship.
This year is the toughest year for the American auto market since the 1990s. Detroit's "Big Three" (GM, Ford and Chrysler) have responded to the bleak market. In addition to closing factories, cutting employees, adjusting models, and other measures, the sale of their brands to cash in liquidity is also a helpless move for these huge losses.
After Ford sold its luxury car brands Jaguar and Land Rover, it has recently been rumored that its remaining high-end brand Volvo may also become the next target for Ford. So who is most likely to be a Volvo bidder?
Target bidder 1: China SAIC
Possibility: 4 stars
Reason: It is conducive to expanding overseas markets
Although SAIC Motor has clearly not contacted Ford to acquire Volvo, the industry still believes that SAIC is one of the major bidders.
First of all, from Volvo's perspective, although Volvo sales in North America have declined, Volvo has great confidence in emerging markets such as China, Russia, and some Eastern European countries, and the strategic focus has gradually shifted to these countries. Last year, the Volvo S40 was already domestically produced at Changan Ford's Chongqing plant. According to the Volvo Car (China), the S80 will soon be realized domestically.
As the most favored auto group in China, SAIC Motor will be an important step toward internationalization if it acquires Volvo. After all, Volvo's brand image is much better than Ssangyong and Rover, which SAIC has already acquired. At the same time, Volvo has a fairly mature sales network in the world. This is a very generous "mothering" for SAIC.
However, some experts said that SAIC's acquisition of Volvo is also difficult. The first is the relationship with Chang An Ford, and the second is whether the price can be discussed together. Volvo is the trump card in Ford's hands and naturally has a trump card price. When Ford purchased Volvo, it spent 50 billion Swedish kronor, according to the current exchange rate of Swedish krona and the renminbi of almost 1:1, the original price was 50 billion yuan.
Of course, for now, Ford is sure to have "depreciation expense" for Volvo, but according to Volvo's current market value and profitability, this discount will definitely not be higher than selling Jaguar and Land Rover. Some analysts believe that SAIC needs to pay at least 30 billion yuan to acquire Volvo.
Target bidder 2: Renault, France
Possibility: 4 stars
Reason: seek North American partners
The earliest strong interest in Volvo was French Renault. But last year, Ford and Renault had had tentative talks on this, and eventually fell out because of price talks.
One year later, another overseas media broke the news that the two sides will once again negotiate on Volvo's sale. However, both parties declined to comment on the news.
Renault’s chief executive Carlos Ghosn stated clearly that in addition to working with Nissan, he also hopes to seek a third car manufacturer, and this time he has set his sights on North America. Renault had signed a cooperation agreement with Chrysler, but it was clear that Ghosn had no interest in acquiring Chrysler. Volvo as a prestigious brand is very attractive to Renault. If Renault really wants to fully open the North American market through the acquisition of brands, Volvo is not a good choice.
Target bidder 3: Dongfeng Motor
Possibility: 4 stars
Reason: Develop self-service brands and seek technical support
After SAIC Motor denied that it had acquired Volvo's idea, overseas media were shocked that Dongfeng Motor Group was a potential bidder.
The highlight of Dongfeng Motor is a commercial vehicle, which is still a layman for the passenger car market. Volvo Group owns Huawo, Shenwoxiwo and Shandong Lingong in China, but due to its unsatisfactory sales of heavy truck joint venture Huawo, it is reported that Volvo Group will withdraw from Huawo and switch to Dongfeng Group.
A few days ago, some media reported that although Volvo Group strongly denied that it would withdraw from Huawo, it did not deny that it would conduct common-sense cooperation with Dongfeng. As a result, Dongfeng Motor should develop passenger vehicles, and Volvo cars are the best point of contact. If Dongfeng can happily greet Volvo, then Volvo's car is bound to bring strong technical support and R&D strength to the Dongfeng passenger vehicle business, and it is also a good springboard for entering the international market.
Target bidder four: BMW
Possibility: 3 stars
Reasons: Technology complement each other and reduce competitors
According to industry analysts, there are three reasons why BMW wants to acquire Volvo.
First, BMW and Volvo are rivals in the luxury car market. If BMW can acquire Volvo, it will surely reduce one competitor in the luxury car market. Second, BMW's handling is known around the world, and Volvo's safety performance is also With one dominant partner, marriage can enable both parties to complement each other technically and increase their competitive advantage in both areas. Third, both are well-known brands, and marriage can promote the market share of both parties.
However, some analysts believe that BMW and Volvo's product line overlap is too high, handling is not good, it is easy to cause a "brother fight" situation.
Who can eventually get Volvo back?