Renault buys Volvo?

[manchild]

Renault reported to have bid for Volvo Cars

11th October 2005

Renault is said to have approached Ford Motor Company with an offer to buy Volvo Cars out of Ford’s PAG brand group, in order to compete with German premium brands as it has been unable to do with its own large models. Ford is said to have declined the offer, but Renault, according to a Vehicle News report, has not abandoned the idea of acquiring a premium brand, such as Saab, since alliance partner Nissan’s premium Infiti brand has no profile in the European market.

Vehicle News also suggests that after considering some kind of financial relationship with DaimlerChrysler last spring, Renault-Nissan CEO Carlos Ghosn has more recently been studying the possibility of forming an alliance with either GM or Ford, with an exchange of shares, on condition that the US Administration undertook to relieve either firm from some of its pension obligations.

Other related stories circulating in automotive media last week included the suggestion that Ford CEO and chairman Bill Ford had approached Carlos Ghosn with an offer to take over his CEO role at Ford – an offer Ghosn had declined. Mr Ford said this week only that he regularly talked to senior executives of other OEMs.

http://www.autoindustry.co.uk/news/indu ... 11-10-05_3

P.S. Monstro, please don't tell me you knew this couple a years ago

[f1.redbaron]

I've read a lot about Renault's CEO (Ghosn). Seems like an interesting character. If nothing, guys at Nissan/Infinity owe him a lot for his restructuring of that company. Before his arrival, Nissan/Infinity were on the verge of bankruptcy (from what I hear).

Renault, though, is not the only auto-maker buying other brands. Toyota had bought shares of Subary from GM not that long ago. I just hope that both companies (although Renault has more to worry about than Toyota) don't end up like Swiss Air.

[manchild]

... I just hope that both companies (although Renault has more to worry about than Toyota) don't end up like Swiss Air.

Why would they have to worry? They are breaking sales records year after year – Megane range is bestseller ever since it appeared on market and this year Renault group has increased their sales like never before.

I think that VW and FIAT are the ones in trouble.

[f1.redbaron]

I'm sure you already know that sales only generate revenues, and not necessarily profits. I'll give you a recent example of what I mean - throughout the entire last summer, GM, Ford and Diamler-Chrysler had been offering "employee discount" pricing on most of their models. For over three months, we were bombarded with series of ads about this promotion. As a result, GM, etc. saw a 25% spike in their sales throughout that period. However, recently, one of the former Big 3 had announced a loss of $250 million during the last quarter. So, as you can see, an increase in sales doesn't necessarily mean an increase in profits.

But, that is not what I meant. Couple of years ago, Swiss Air was doing relatively well. Then they decided to buy couple of other on-the-verge-of-bankruptcy airlines (SAS, Sabena, etc.), hoping to turn them around. What ended up happening is that Swiss Air was forced to put in tons of money into these other airlines, while not meeting the needs of their own. Swiss Air's resources were stretched to the limit, and eventually they went under.

Toyota and Renault should take that into consideration. While both companies are doing extremely well (I know this, because I follow it), there is a risk that they might have to shift some financial resources over to their newly acquired companies, thus putting all kinds of limits on their own brand. So, what I meant when I said that Renault should be more cautious, was that Toyota is by far the richest auto-maker putting them in a position where they can afford to spend more money (example: Toyota earned over $11 billion in profits in 2003).

[manchild]

It should be mentioned that Swiss air was also hit by 9/11 and that crash one of their planes had soon after that.

[f1.redbaron]

It should be mentioned that Swiss air was also hit by 9/11 and that crash one of their planes had soon after that.

I doubt that 9/11 was a factor. They went under just weeks after 9/11 which is just not enough time for a company of that size to feel the impact of it. If anything, US companies would've been the first ones, and even they survived.

I could be wrong, but I think that in addition to their lousy financial policies in an era after they acquired those bankrupt airlines, Swiss Air was re-routing most of their flights through Switzerland - for example, rather than flying from Brussels to some other European destination on Sabena, Swiss Air would have them going from Brussels to Zurich to final destinaton (on Swiss). Again, I could be wrong.

Now, the plane crash could add to their financial strains, but I don't remember of any Swiss Air plane crashes aside from an MD-11 off of Peggy's Cove, NS, Canada back in 199? (7, 8, maybe?). Was there one I missed?

[manchild]

I just had in mind that after 9/11 first plane to crash was Swiss Air’s and combined with global panic and focus of public and media on safety it had much greater impact on Swiss Air than what it would be if there was no 9/11…