FORD may sell Volvo, the Swedish car-maker, to BMW as part of a drive to raise cash, say senior car-industry sources. Sources
close to Ford and BMW said yesterday that there had been preliminary
talks between the two automotive giants, although that was denied by
the companies. “No talks have taken place,” said a BMW spokesman. BMW
and Ford are understood to have held extensive talks two years ago
about a collaboration involving Jaguar and Land Rover. Ford later sold
the two British car groups to Tata of India. Ford and its Detroit
rivals, GM and Chrysler, are under increasing financial pressure as
sales slump and debts mount. GM reports what are expected to be poor
third-quarter figures this week and is intensifying merger talks with
Chrysler, which told staff on Friday it may have to lay off a quarter
of its work-force. Car-industry sources say the pair are pressing for
some kind of financial assistance from the US government before they go
ahead with the deal.
Members of the Michigan congressional delegation have written to US
Treasury secretary Hank Paulson urging him to use the $700 billion
(Ł440m) bank package to “protect this critical sector”. In September
President George Bush signed off on a $25 billion loan package for the
car industry to encourage the sector to develop more fuel-efficient
vehicles. However, it has yet to receive that cash and in the
meantime the credit crunch has hit. Executives and lobbyists are now
arguing they need that money fast and that they should also be included
in the bailout. The car companies’ financing units are already part of
that rescue package. Stephen Collins, president of the Automotive
Trade Policy Council, a Washington-based lobbyist representing the Big
Three, said 2008 had proved a “perfect storm” for the auto industry. “The
government needs to look at the fact that our companies have 2m people
for whom they provide directly health insurance. If they are not able
to provide that, the government has a bigger problem. We have over 1m
to whom we pay pensions. That’s just our three companies [Ford, GM and
Chrysler],” he said. |