Volvo Sale To Changan Possible

The Ford Motor Company appears bent on selling Volvo in a bid to raise as much as six billion dollars to fund its struggling operation. Volvo has been part of the Ford fold since 1999, when Ford purchased Volvo car operations from the Swedish company.

Now, Ford is playing “mum” to reports that Changan Motors president Xu Liuping met with Ford and Volvo officials this past fall at an auto show being held in the Chinese city of Guangzhou. Word from that meeting is that Changan is very interested in Volvo and that a deal may be coming soon.

Changan’s operations are currently confined to China, but like a number of other automakers established in the People’s Republic of China, they’re eager to expand their visibility and enter new markets. A purchase of Volvo would give Changan instant name recognition much as Tata Motors gained when it purchased Land Rover and Jaguar from Ford earlier this year.

But there are some who believe that Changan isn’t ready to make a purchase of Volvo simply because the Chinese automaker isn’t large enough to handle such an acquisition nor are they experienced in turning around a troubled operation. Chinese automakers operate under the good graces of the communist government while Volvo’s position is a bit more complicated thanks to its international footprint.

Perhaps a better fit for Volvo would be a company such as the Hyundai Kia Automotive Group. Hyundai has recently proven that it can build luxury cars as the Genesis sedan compares favorably with BMW, Cadillac, Lexus, Mercedes and others. However, Hyundai routinely denies it is interested in acquiring existing brands stressing that the automaker has its hands full with its two mushrooming brands.

BMW or Mercedes might be a very good fit for Volvo, but both of the German automakers have been tightening their belts lately and rumors of a possible BMW-Mercedes merger have surfaced over the past few weeks. The two luxury automakers recently agreed to collaborate on various engineering and design projects, perhaps the initial phase of something greater being planned.

For Ford, waiting for a good offer for Volvo may be its biggest challenge in 2009. If Ford finds a buyer, then they may not need federal help, but if they fail to find a buyer then federal intervention may be necessary to shore up America’s second largest automaker.

Finally, talk of merging GM owned Saab with Ford and spinning off the automaker into a new company have also cropped up lately. With federal funding an issue, more consolidation talks are likely, perhaps leading to a blockbuster merger between Ford, GM and Chrysler.