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Saab, Volvo Not Likely to Change Hands Soon – Detroit FreePress
By Mark Phelan – December 7, 2008
It's possible the register will ring up "no sale" when General Motors Corp. and Ford Motor Co. are done evaluating their Swedish brands, and that might be best for all concerned.
If nobody buys, it won't be because Saab and Volvo are irretrievable brands, but because there's no money out there and every automaker on Earth has its hands full as the global economy totters.
Consider this: Tata, India's biggest and perhaps best-run company, is having trouble getting long-term financing for Jaguar and Land Rover, which Tata bought from Ford this year. The company that accounts for 3.2% of the gross domestic product of the world's most populous free-market democracy can't line up backing to support a $2.3-billion acquisition.
The bankers aren't lending. Automakers from Japan to Germany have battened down the hatches to ride out the economic storm. You think people will be lined up to hand over the $6 billion Ford's reportedly asking for Volvo?
We don't know what GM's asking price for Saab might be, but really, does it matter? Nobody's buying.
Perhaps that's why Saab's CEO is trying to convince the Swedish government to invest in the company. In this environment, it's conceivable that Ford and GM will consider whatever meager bids come in, study the brands long and hard, and decide that the smart move is to keep them.
Ford has certainly been well served by Volvo. The brand has made money over the years, though not consistently enough.
Volvo's dedication to safety has improved cars like the Ford Flex and Lincoln MKS, and its upscale acumen will influence everything from interior look and feel to ride and handling when the sleek new 2010 Taurus debuts at the North American International Auto Show in Detroit next month.
Saab has never made a dime for GM, but it has contributed to the automaker. It's been a test bed for alternative-fuel technology with ethanol-burning cars that account for a huge chunk of its sales in Sweden.
Like Volvo, Saab provides great expertise in safety. Saab's leadership in turbocharging helped GM develop the fuel-efficient engines that will push the 2011 Chevrolet Cruze's fuel economy well past 40 m.p.g. on the highway.
Both brands -- if run properly -- also attract customers who wouldn't enter a Ford, Lincoln, Chevrolet or Cadillac dealership. They have loyal owners around the world and appeal to a well-educated, affluent demographic. While GM and Ford will entertain whatever offers come over the transom, they continue to work on some intriguing upcoming models for Volvo and Saab.
The sleek S60 concept car Volvo plans to show at the NAIAS has great promise.
Volvo must add some North American production if it wants to survive as part of Ford. It's too vulnerable to exchange-rate fluctuations that can drive it from profit to loss overnight.
Volvo's new XC60 crossover would have been an excellent choice to build in the United States, but Volvo missed that opportunity.
Saab is ahead of Volvo on that front. GM will build the Saab 9-4X crossover alongside the 2010 Cadillac SRX at an as-yet-undisclosed North American plant. Saab's car line languished for years under GM, but a fine new all-wheel drive powertrain in the 2009 9-3 and a couple of upcoming models could change that.
The gorgeous 9-5 sport sedan that Saab plans to launch late next year will be built in Europe and could hit the road in America just as consumer confidence and the economy begin to recover. A nifty small car and convertible based on the 9-X concept are in the works.
If the only offers are at bargain-basement prices, and if the Swedish government provides the aid Ford and GM seek to get those vehicles on the road, Volvo and Saab may be here to stay.
http://www.freep.com/article/20081207/COL14/812070447/1002/BUSINESS
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