Critics Doubt Swedish Homecoming Possibility

By: Glady Reign


Just about a decade after the sale of Volvo Cars to the Ford Motor Co., AB Volvo is reportedly looking forward to acquiring it back. According to the Swedish business daily Dagens Industri, undisclosed sources claim that the commercial vehicle juggernaut is investigating acquiring a minority share of its former automotive division.

Analysts were skeptical, saying that the deal would not make sense for truck maker Volvo. Critics, meanwhile, doubted such a possibility, claiming that buying into Volvo Cars would demonstrate a lack of "industrial logic" on AB Volvo's part. After the sale of the automotive unit, AB Volvo focused on empowering its position in heavy-duty trucks. With the acquisition of Mack and Renault Trucks in 2000, along with the purchase of Nissan Diesel in 2007, the Swedish company is the second-largest truck maker around the globe.

Volvo Group was formed as a subsidiary company to SKF. It was not until 1935 when Volvo AB was launched on the stock exchange that SKF sold most of the shares in the company. Volvo Cars was owned by AB Volvo until 1999, when it was purchased by the Ford Motor Company and put in its Premier Automotive Group (PAG).

Volvo Cars is a luxury automaker that rivals Acura, Audi, BMW, Cadillac, Infiniti, Lexus, Mercedes-Benz and Saab. Over time, the Gothenburg-based automaker has established a reputation for safety, comfort, longevity, and solidity. The , engines, airbags, seatbelt with pretensioners and other auto parts accessories are renowned for exuding the vital qualities of the Swedish automaker. Some enthusiasts have criticized the automaker's vehicles for its boxy look. At present, the automaker is entertaining a new design philosophy to remedy this.

Representatives from AB Volvo have not publicly voiced any interest in returning to the automotive market in recent years and continue to downplay such likelihood. Similarly, Volvo Cars spokeswoman Maria Bohlin refused to comment on "speculations in the media."

Another potentially involved automaker is French Renault SA. After selling its commercial vehicles and Mack Trucks divisions, it now owns a 20 percent stake in Gothenburg-based AB Volvo. Renault SA refused to comment on a report in Swedish newspaper Dagens Industri that it may buy Volvo Cars from current owners Ford. Contacted by Thomson Financial, a spokeswoman for the French automaker said: 'We have no comment to make on press speculation.'

The Renault spokeswoman reiterated that since January 1982, Renault has had a cooperation agreement with Volvo Cars, under which the Swedish company distributes Renault cars and provides after-sales services in Nordic countries. As announced in August last year, the partnership is due to come to an end on Dec 31st this year, she explained.

Renault was earlier quoted saying it is planning to launch its own distribution and service unit in Sweden, Norway, Finland and Denmark.

Earlier this month, Ford said that it is looking at options for its Jaguar and Land Rover brands amid speculation the British brands are up for sale. In March, Ford sold a majority stake in Premier Automotive Group's Aston Martin for $848 million. Aston Martin Lagonda Limited, a British manufacturer of luxury performance cars, was owned by Ford from 1994 until 2007. On 12 March 2007, it was acquired by a British consortium led by David Richards of Prodrive.

Jaguar, Ford and Volvo are part of Ford's Premier Automotive Group. Observers speculate the Dearborn-based automaker may have to include Volvo in a sale of Jaguar and Land Rover because the Swedish brand is the strongest part of Premier Automotive Group. Additionally, Volvo was the subject of sale speculation to BMW AG in late May. But the said rumor was dismissed by Ford.

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