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Volvo up for sale?


Reports that Ford has added Volvo to its Premium Automotive Group sell-off, has sent flutters through the Swedish manufacturer's Australian operation.

“Officially, it's no comment because we haven't heard anything or received any instruction from Ford or Volvo,” Volvo Australia spokesman Todd Hallenbeck says.

“All we know is what has been floated in European media.”

Reports from Europe claim Volvo is joining Land Rover and Jaguar on the sale block, as Ford overhauls its business to stem record losses.

As the flagship of Ford's Premier Automotive Group (PAG) business, and the most likely to turn a profit, Volvo is considered unlikely to be sold but reports have priced the company at $US8 billion ($9.73 billion).

“The worrying thing about these reports, even if they are speculation, is that it doesn't do a lot for brand confidence,” Hallenbeck says.

The disappointing aspect of the reports is that they come when Volvo internationally and in Australia is on an upward curve, he says.

“The relationship between Volvo and Ford has always been very strong. It has always been a money earner for them ... Ford has invested the money for us to develop the C30, the new C70, the S80. They have given us the real foothold to develop a new model range."

“There is a lot of speculation and a lot of people are saying that Volvo may be the only brand (within PAG) that has a value ... but it is all just speculation.”

Hallenbeck points to global sales and a local operation that is fast putting the dark days of 2002-03 behind.

“We couldn't be more happy with the way things are going,” Hallenbeck says. “To the end of June we were up 24 per cent on the previous year and that was up 37 per cent over '05.

“To last week we have sold more than 2900 cars, more than for the entire year in 2003. We have a lot of momentum, the dealers are incredibly happy and everybody is smiling.”

One of the driving forces behind Volvo's resurgence has been the refreshing of its entire model range.

“When the XC70 launches there will not be a model in the range that is more than three years old,” Hallenbeck says.

Ford, which sold Aston Martin for $US450 million ($516 million)last year, has valued Volvo at 25 per cent more than the $US6.5 billion ($7.45 billion) it paid in 1999.

The official line from Ford is that it is not in discussion with any companies regarding a sale of Volvo, but added that it is continuing to assess all of its options for the business.

Jaguar and Land Rover have already attracted interest from a range of potential buyers, with Ford confirming it has received approaches from a number of parties.

The group says it is “aggressively evaluating that level of interest” and is thought to have set a deadline for initial bids this week, although it is still to officially announce its decision to sell the brands.

Private equity group 3i is one of those considering bidding for Jaguar and for Land Rover, according to the Mail On Sunday. Other private equity firms understood to be in the running include Cerberus and One Equity Partners.

Ford launched a review of the PAG business after the overall Ford group posted losses of $US12.7 billion ($14.56 billion) last year, the largest deficit in its 103-year history.

PAG almost trebled its pre-tax losses last year, from $US89 million ($102 million) in 2005 to $US327 million ($375 million).

Pre-tax profits at the division improved in the first three months of this year, at $US191 million ($219 million) against $US129 million ($148 million) for first quarter in 2006.

 

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