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Daimler denies interest in Volvo

According to the latest edition of the weekly Der Spiegel, German car giant Daimler recently decided not to buy Swedish-based Volvo Cars from ailing US manufacturers Ford, but Daimler has now denied it was ever interested.

Published: 4 January 2009 11:18 CET

Daimler denies interest in Volvo

Photo: DPA

The report says that Daimler boss Dieter Spiegel spent the last few weeks examining the possibility of a purchase and concluded that there were too many potential drawbacks. But in a statement made on Sunday afternoon in Stuttgart, a Daimler spokesman refuted the report, claiming that it had never had any interest in buying the struggling Swedish company.

The report claimed that Daimler predicted problems with harmonising Volvo parts and practices with its own prestige Mercedes cars, an operation requiring substantial investment and little return. Ford bought Volvo Cars in 1999 from the Volvo group for a hefty $6.45 billion.

According to Der Spiegel, Daimler rival BMW also turned down the chance to take over Volvo, leaving Ford with little hope of finding a buyer, though China’s Changan has now been mentioned as a possibility.

In a statement made at the beginning of December, Ford Motor Company said that it was reviewing strategic options for Volvo Car Corporation “in response to the significant decline in the global auto industry, particularly in the past three months, and the severe economic instability worldwide.”

Ford said the review would probably take several months to complete, adding that it would continue to work closely with Volvo Cars, which is restructuring “to operate on a more stand-alone basis” under chief executive Stephen Odell.

Volvo Cars sales peaked in 2000 at 422,100 units, and Odell claimed last month, “We have a strong brand presence in Europe, North America and the Asia Pacific region, and are growing in key markets such as China and Russia, where we are the leading premium brand.”

But car sales have slumped in the United States and Europe amid the global financial crisis that erupted in August 2007, and Volvo Cars has announced thousands of job cuts worldwide since June, most of them in Sweden.

Volvo Group chairman Finn Johnsson recently told Swedish financial daily Dagens Industri that his company was not interested in buying back Volvo Cars, and the Swedish state has also ruled out acquiring it.

How is Denmark's economy handling inflation and rate rises?

The council, led by four university economics professors commonly referred to as “the wise men” or vismænd in Denmark, gave a much rosier picture of Denmark’s economy in its spring report, published on Tuesday, than it did in its autumn report last year.

“We, like many others, are surprised by how employment continues to rise despite inflation and higher interest rates,” the chair or ‘chief wise man’, Carl-Johan Dalgaard, said in a press release.

“A significant drop in energy prices and a very positive development in exports mean that things have gone better than feared, and as it looks now, the slowdown will therefore be more subdued than we estimated in the autumn.”

In the English summary of its report, the council noted that in the autumn, market expectations were that energy prices would remain at a high level, with “a real concern for energy supply shortages in the winter of 2022/23”.

That the slowdown has been more subdued, it continued was largely due to a significant drop in energy prices compared to the levels seen in late summer 2022, and compared to the market expectations for 2023.

The council now expects Denmark’s GDP growth to slow to 1 percent in 2023 rather than for the economy to shrink by 0.2 percent, as it predicted in the autumn.

In 2024, it expects the growth rate to remain the same as in 2003, with another year of 1 percent GDP growth. In its autumn report it expected weaker growth of 0.6 percent in 2024.

What is the outlook for employment?

In the autumn, the expert group estimated that employment in Denmark would decrease by 100,000 people towards the end of the 2023, with employment in 2024 about 1 percent below the estimated structural level.

Now, instead, it expects employment will fall by just 50,000 people by 2025.

What does the expert group’s outlook mean for interest rates and government spending?

Denmark’s finance minister Nikolai Wammen came in for some gentle criticism, with the experts judging that “the 2023 Finance Act, which was adopted in May, should have been tighter”. The current government’s fiscal policy, it concludes “has not contributed to countering domestic inflationary pressures”.

The experts expect inflation to stay above 2 percent in 2023 and 2024 and not to fall below 2 percent until 2025.

If the government decides to follow the council’s advice, the budget in 2024 will have to be at least as tight, if not tighter than that of 2023.

“Fiscal policy in 2024 should not contribute to increasing demand pressure, rather the opposite,” they write.

The council also questioned the evidence justifying abolishing the Great Prayer Day holiday, which Denmark’s government has claimed will permanently increase the labour supply by 8,500 full time workers.

“The council assumes that the abolition of Great Prayer Day will have a short-term positive effect on the labour supply, while there is no evidence of a long-term effect.”

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