Ford: Playing Its Last Hand?

An article from the Huffington Post today claims that Ford is "secretly" in talks to sell Volvo.  First, let me say that this is another example of the media trying to create the perception of valuable content. 

It's been known for quite some time now - for at least two years - that Ford has been looking for buyers. In fact, I discussed this in an article a year ago when critiquing its sale of Jaguar and Land Rover to Tata Motors (see Ford As a Crystal Ball For America).

Those of you who have not read the article, I advise you to because it’s quite revealing in many ways. 

Here are some excerpts:

“Although Ford bought Volvo in 1999 for $6.4 billion, it has been the company’s best seller of the premier brands. But as a part of its only remaining way to raise cash, Ford has been looking for potential buyers for Volvo for over a year.

While talks were in place with BMW in 2007, nothing came out of this. Perhaps this prompted the decision to sell Jaguar and Land Rover. If the company sells Volvo, it could bring in potentially $9 billion, assuming there are any buyers who are willing to pay fair value during current economic conditions. However, based upon the continued problems, Ford may soon have no choice but to sell Volvo to the highest bidder.

Selling Volvo would certainly help Ford in the short-term, but would severely hinder its longer-term business prospects because it will no longer have any premium brands other than the struggling Lincoln. Given the desperate need for cash as well as the global economic outlook, it is quite possible that Ford will be forced to sell Volvo for much less than it’s worth.

So when I ran across the Huffington Post headline, I thought there were some “breaking new developments.” After clicking the “read the whole story here” link, I was quite annoyed to see a Bloomberg article appear, dated February 5, 2009. 

What kind of legitimate newspaper publishes this misleading content? The best they can do is feed off of stories that are five months old from another source, while giving readers the impression they have breaking news? What a complete waste of time!

As for Bloomberg, given the events that occurred in the auto industry in 2008, why did it take them so many months to come out with that story?

All I have to say is these journalists are so behind the curve it’s inexcusable. This is why the media is approaching bankruptcy.

Back to the original point that caught my interest. Much has happened since the twelve months I wrote that piece. At this stage, I have little doubt Ford will sell Volvo soon. If it does, that would be a very big mistake unless they happened to get at least $8 billion for the unit, which is highly unlikely.

Continuing from my July 10, 2008 article,

“We have already seen how Asian and European auto makers have taken leadership of what was once the pride of American manufacturing. One need only look at Detroit’s socioeconomic demise over the past two decades to see the effects of free trade. Detroit represents but one of many casualties of free trade. On a larger scale we see similar effects in Ohio, Illinois, Pennsylvania and many other states."