Ford And Why I Think It Will Sell Volvo--Do You Agree?


Ask yourself a question, and be honest: If you ran Ford, would you hang on to Volvo and continue sinking money into turning around the brand or would you unload it as soon as you got a decent price?

It really is that simple for Ford CEO Alan Mulally.

Yes, I know the man running Ford and his lieutenants all say Volvo is not for sale. Before we get into this debate let me say I think Mulally's being straight with us, while not telling us his long range plans. True, Volvo's not for sale right now. Do I think that will change in the future? You bet.

Job 1 at Ford is fixing Ford. And from Mulally's perspective, you get there by shedding brands (Aston Martin, Jaguar, and Land Rover are either gone or going) and making sure Ford (the brand) is the best it can be. That means focusing on streamlining costs, product development, marketing, etc. And to make sure that turnaround works, you need a singular focus and cash. Two things Mulally gets if and when he sells Volvo.

So why not sell Volvo right now? The time isn't right. The credit markets are horrible. Potential buyers won't give Ford the $5-$6 billion Volvo is worth. So Mulally will sit and wait for the right time.

But from my perspective (and many others in the auto industry) the European brand will eventually be sold. Remember, Ford is leveraged to the hilt, and at some point Mulally and his crew will need to repay the loans. If you were him, and you had the chance to secure some cash to give yourself a little breathing room wouldn't you do it?

Finally, take a look at Volvo? This brand has a strong reputation that it built in the years leading up to Ford buying it in '99. But since then, you could say Ford's been more of a caretaker than an enhancer of Volvo's reputation. Yes, I know Volvo fans will say, "Our quality and safety are still among the best in the industry and these cars are beloved."

0k, but how much of that is because of Ford? All of these factors explain why I think Mulally will eventually sell Volvo. If you disagree, let me know.

Questions? Comments?