After dispatching the ultra-luxury brand Aston Martin earlier this year and auctioning off Jaguar and Land Rover, Ford is now looking to sell the Swedish brand Volvo according to The Financial Times. According to reports, Ford's Chief Executive Officer Lana Mulally may be looking to sell the luxury brand.
Although Mulally, and Ford for that matter, is yet to divulge information concerning the issue, there are a lot of opinions floating in the auto industry as to why Ford should sell the Swedish brand which it acquired in 1999.
Rod Lache of the Deutsche Bank in an interview with The Financial Times pointed out two reasons why Ford is better off without Volvo.
The first reason is that once Ford has sold Volvo, it can simplify its operating structure. It can be remembered that Ford announced earlier this year that they will be focusing on their core operations as part of their turnaround plan. With Volvo in Ford's folds, the Dearborn-based automaker will be spending both money and effort in synching Volvo's operation with other marques.
The second reason pointed out by Mr. Lache is that Ford's coffers will be boosted by the sale of the Swedish auto brand. This money can go to their healthcare liabilities and in their contract talks with the United Auto Workers (UAW).
Although Volvo has been integrated into Ford's core operations to some point, it would be a sacrifice that Ford needs to take in order to swiftly turn the company back to profitability. After all, the company has already closed down assembly facilities which assemble Ford engines and other components including and the like.
Meanwhile, Ford is seriously pushing through with its plan to sell Jaguar and Land Rover, an action that has been anticipated by many since Ford sold Aston Martin earlier this year. Among the interested buyers of the two British luxury brands is Indian automaker Tata.
Tata Motors is the largest Indian automaker and it is currently getting a lot of attention after carmaker after carmaker expressed their entry in the growing Indian auto market. After announcing that they will be introducing a $3,000 compact car in India, Tata Motors may be looking to diversify its offering as it is reported that the company is willing to bid about $1.3 billion for the two British brands.
When asked about the issue, a Tata Motors spokesperson has this to say: "We have absolutely no comments to make on mergers and acquisitions." It is reported that Tata Motors has signed a confidentiality agreement and is already having talks with the Dearborn-based automaker.
This development has received wide interest from analysts. Abdul Majed, an auto industry analyst for Price Waterhouse, says that Tata Motors aiming to buy Jaguar and Land Rover makes perfect sense. "For an Indian auto firm buying into an American or European auto company makes perfect sense as it can then leverage the brand, the product development capability and distribution platform and get access to international markets," said the analyst.
Although buying luxury brands makes sense, Abdul Majed pointed out that Tata Motors should only go for Land Rover since Jaguar has been a money-loosing firm for years. This though might not be possible since Ford has almost joined Jaguar and Land Rover by integrating operations of the two brands together. In fact, Jaguar and Land Rover vehicles are manufactured in the same assembly facility and that is one strong reason why Ford is selling the two as a package.
