BMW to buy Volvo and Leverage it for MINI?

Gerald May 21st, 2007 Link

There’s likely less to this than meets the eye. If you had a legitimate opportunity to pore over your competitor’s financials you’d seize it – even if you weren’t really going to buy them.

Given that BMW is making good $ at the size that they are; and after the Rover disaster (in which MINI was the only good thing) I doubt the Quandt family want to buy any other auto-maker.

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njpaguy May 21st, 2007 Link

BMW purchasing Volvo wouldn’t be that unreasonable. Adding Volvo would expand their portfolio down market by a half step. No real direct competition between brands model for model but quality of equal importance across both product lines.

Ford was kind enough to take Land Rover off BMW’s hands. Maybe it’s time for BMW to return the favor.

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JP May 21st, 2007 Link

BMW lost millions on Rover. Ford took over Land Rover and they are losing millions. Volvo is moving upmarket. Look at the pricing of the C30 for example. The upper end of the Volvo product line runs right into the pricing of X5 or lower 5 Series. It seems to me that Volvo would not be a good fit. To add capacity BMW can expand in the USA i.e. South Carolina or even in China which is now the second largest market in the world.

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Doug May 21st, 2007 Link

Given that BMW is making good $ at the size that they are… I doubt the Quandt family want to buy any other auto-maker.

BMW isn’t all that profitable in the US. For example, BMW gives to each US buyer an average of $4,000 back, mainly through its generous lease program. (A lot has been written about this online.) This means that BMW does have reason to broaden its offerings with a brand like Volvo, which could sell for a bit cheaper than the average BMW. It would be also great for people who love Volvo, as BMW seriously gets the concept of brand heritage, and Ford doesn’t.

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msh441 May 21st, 2007 Link

I would tend to second what Gerald has said. Volvo is a company that is sucessfully moving up-market right now making a great product while still making a terrific profit (the most profitable in the PAG house, and one of the bigger moneymakers worldwide right now). I would guess that BMW is looking at Volvo for their business model, proction budget and potential future compitition than anything else.

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Aussom May 21st, 2007 Link

The following extract from the referenced article possibly indicates that BMW wants to leverage from Volvo’s designing and engineering as well as increase production to make a decent profit margin to ensure MINIs future viability:

“The smaller cars in Volvo’s range would have remained front-drive and would probably been merged with an enlarged Mini family.

In fact, it is the future of the Mini brand that is causing BMW a considerable headache. It has been forced to make major investments by redesigning the new Mini, as well as engineering the Mini Clubman estate.

Mini sales are still down on their 2005 peak, and BMW insiders acknowledge that a total annual output of 250,000 to 270,000 cars is not enough to secure a profitable long-term future for the Mini brand.

Potentially, BMW could have built its proposed large five-door Mini and Mini SUV on the same front-drive chassis as a future S40 and V50.

An annual output of 500,000 upmarket Volvo and Mini front-drive cars would have ensured long-term profitability.”

I used to own a small Volvo and enjoyed its quality, comfort, safety and amortization of replacement part costs (eg: if your part was designed to last 5 years and only lasted 3 years, the replacement part cost was reduced based on the remaining 2 years). I can see how buying Volvo makes sense for MINI in terms of leverage and reducing design and engineering headaches.

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Brendan Moore May 28th, 2007 Link

Yes, we did a piece: http://www.autosavant.net/2007/05/bmw-to-buy-volvo.html on this a couple of days ago, but the noise is getting much, much louder in the last 24 hours. Something is happening with Volvo, but it is a fluid situation regarding a purchase by BMW. Regardless, its clear now that Ford is shopping Volvo around, so they must have decided they need more money for the huge job they have in bringing back Ford.

B Moore – Autosavant.net

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PaulGraz May 30th, 2007 Link

Detroit news on this subject (http://www.detnews.com/apps/pbcs.dll/article?AID=/20070530/AUTO01/705300367/1148/rss25)

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