The Auto Writer

As America’s Big Three automakers prepare to meet with Congress later this week in a bid to offer solutions for their respective plights, details about these plans are now circulating members of the media. Likely this is happening so that Ford, General Motors, and Chrysler want to win the PR war
before heading back to Washington, something that proved disastrous when they made the mistake of first appearing there via corporate jet in November.

Right now we know that General Motors is talking about shedding some of its brands, Chrysler says they have a plan in place to ensure its long term survival, while Ford is saying that they are considering selling Volvo, the Swedish automaker Ford it bought for about $6.5 billion in 1999. Volvo represents the last of the brands which once made up the Ford Motor Company’s Premier Automotive Group as Aston Martin, Jaguar and Land Rover were sold in recent years while Lincoln was placed back in the Ford North America fold in 2002.

The possible sale of Volvo raises a number of questions including just how much Ford could expect to gain from a sale of the automaker. DaimlerChrysler (now Daimler AG) learned just how much Chrysler’s worth dropped over the years going from a $37 billion asset to something that they dumped for just $7.2 billion in 2007 (while retaining a 19.9% share). True, Volvo is a much better brand than Chrysler, but for Ford to recoup its full investment seems like a stretch especially in today’s depressed global economy.

Ford’s recent sale of a portion of its Mazda stake underscores the devaluation of automotive brands, something not lost on Blue Oval management. Still, is Volvo worth at least three or four billion dollars and will these monies be used by Ford for new products, to cover union obligations, or for something else?

Importantly, the sale of Volvo might also break up a relationship with the Swedish automaker that has proven to be enormously beneficial to Ford. Particularly, many of Volvo’s safety features have found their way into Ford, Mercury, and Lincoln vehicles, giving Ford an edge over its competition. Indeed, when Consumer Reports says that the cars you are building are on par with Toyota and Honda, then you’re doing something right. Volvo has played an important part in helping Ford achieve this feat, something Ford does not want to see disappear after the sale.

Perhaps the word of the day, collaboration, best suits Ford’s relationship with its many partners whether they own them outright, have a stake in them, or are an unrelated competitor. The global car business is changing dramatically with manufacturers learning that going it alone drives up costs while working in partnerships benefits all concerned. Ford will likely arrange to keep platform and engineering agreements in place with Volvo if and when a viable suitor steps forward.