Chinese Volvos Could Be Coming To A Showroom Near You

Posted by: David Kiley on June 25, 2008

Ford Motor, it has been reported by Swedish newspaper Dagens, is in negotiations to sell its Volvo car division to a Chinese automaker believed to be Shanghai Automotive Industries.

Ford shopped Volvo last year, but didn’t find anyone willing to step up with the $5-$8 billion it was looking for. BMW and Renault-Nissan are both believed to have looked at acquiring Volvo, which lost money for Ford last year.

A Ford spokesman said: “We have been consistently saying since the end of last year that Volvo is not for sale. We are focused on improving Volvo’s business results.”

Ford has already sold Aston Martin, Jaguar and Land Rover to raise cash and better focus the company on rebuilding the Ford brand. But Ford, facing greater cash needs than it thought because of the softening U.S. economy and weakening auto sales, is looking for more. The price Ford is willing to take for Volvo is believed to have come down in the last six months.

Ford has knitted together a chunk of Ford vehicle engineering and procurement with Volvo to achieve efficiencies. The current European Focus and Volvo S40 shared development. And the current Ford Taurus,Ford Flex, Lincoln MKS and a forthcoming Lincoln crossver, are all built off a platform derived from the previous generation Volvo S80. But they are not processes that couldn't be continued if Volvo had a different owner. Indeed, it is possible, Ford may only sell 90% of the Swedish automaker, according to one Ford official.

Volvo has been studying how it could build cars in North America in Ford factories as a way of hedging against the weak dollar. A decision on that is expected this summer. Even under a new owner, that could still happen.

The Chinese are not the only bidder mentioned in the story. A Russian investor is also reportedly talking to Ford, according to Dagens.

Shanghai Automotive (SAIC) already owns the British Rover and MG auto businesses.