Full speed ahead as Ford plans summer sale of Volvo

FORD, the American car giant, is secretly planning the $6bn (£3.05bn, E4.03bn) sale of Volvo, its loss-making Swedish brand, for the summer.

The Business understands Ford is determined to press ahead with the sale despite recent comments that it would hold on to Volvo for now and take it upmarket. A sale would complete Ford’s strategy of disposing of overseas brands to focus on its core American operations.

A senior banker familiar with the situation said Ford intends to start work on the auction shortly after it completes the £1bn-plus deal to offload Jaguar and Land Rover, its West Midlands-based luxury marques. A deal with Tata, the Indian conglomerate, should be completed in the next few weeks.

The banker said that Ford had publicly played down the possibility of selling Volvo as executives grew “fed-up and tired” of speculation over the marque’s future.

It is thought that a beauty parade of investment banks will take place in the next few months. HSBC, Goldman Sachs and Morgan Stanley would be frontrunners, having advised on Jaguar and Land Rover.

The auction of Volvo will prompt considerable interest, and potential bidders are expected to include Ripplewood Holdings and Cerberus, the private equity groups that looked at Jaguar and Land Rover, as well as Chinese trade buyers. Bids are likely to range from 6bn.

A second senior banker said: “Sooner or later a serious decision will be made and Ford will get out of Volvo.”

Ford bought Volvo’s car division for $6.45bn in 1999. Volvo, founded in March 1927, sold 428,000 cars in 2006, down 4% on the previous year. This was only 6,000 cars up on 2000, Ford’s first full year of ownership. In November, Ford announced Volvo had made a third-quarter loss, but did not specify a figure.

Ford was unavailable for comment.

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