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Volvo Cars makes bid for bankrupt Saab: report

Swedish automaker Volvo Cars has placed a bid for large parts of its bankrupt counterpart Saab Automobile.

Published: 23 February 2012 13:08 CET

Volvo Cars makes bid for bankrupt Saab: report

Volvo has previously expressed its interest in acquiring some of Saab’s assets and has now placed a bid, Svergies Radio (SR) reported.

However, Volvo officials were reluctant to shed any light on the bid.

“It’s up to the bankruptcy administrators to comment on the bidding,” Volvo spokesperson Per-Åke Fröberg told SR.

He confirmed that Volvo remains interested in some of Saab’s manufacturing and testing equipment which could be used in Volvo’s own operations rather than for restarting production at the Saab factory in Trollhättan in western Sweden.

Citing unnamed sources, SR reported that Volvo wants to buy all the existing equipment in Saab’s factory.

The machines and other equipment would then likely be moved to Volvo’s plant in Torslanda in western Swedne or to China for use in a production facility to be built by Volvo and current owner Geely.

Geely bought Volvo from US auto giant Ford in 2010 for $1.5 billion, less than a quarter of what Ford paid for the company in 1999.

On Wednesday, Geely also announced it will begin assembling cars in Egypt this year with a local partner, marking its latest push overseas as domestic demand hits the brakes.

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Sweden's Volvo regains strength after pandemic puts brakes on earnings

Volvo Group CEO Martin Lundstedt. Photo: Adam Ihse/TT

In 2020, the group saw “dramatic fluctuations in demand” due to the Covid-19 pandemic, chief executive Martin Lundstedt said in a statement.

For 2021, Volvo raised its sales forecasts in its trucks division – its core business – in Europe, North America and Brazil.

However, it said it also expected “production disturbances and increased costs” due to a “strained” supply chain, noting a global shortage of semiconductors across industries.

The truck making sector is particularly sensitive to the global economic situation and is usually hard hit during crises.

In March, as the pandemic took hold around the world, Volvo suspended operations at most of its sites in 18 countries and halted production at Renault Trucks, which it owns, in Belgium and France.

Operations gradually resumed mid-year, but not enough to compensate for the drop in earnings.

With annual sales down 22 percent to 338 billion kronor (33.4 billion euros, $40 billion), the group posted a 46 percent plunge in net profit to 19.3 billion kronor (1.9 billion euros).

Operating margin fell from 11.5 to 8.1 percent.

However, the group did manage to cut costs by 20 percent.

“We have significantly improved our volume and cost flexibility, which were crucial factors behind our earnings resilience in 2020,” the group said.

Volvo's business regained strength in the second half of the year.

“Customer usage of trucks and machines increased when the Covid-19 restrictions were eased during the summer and this development continued during both the third and fourth quarters,” it said.

“Both the transport activity and the construction business are back at levels on par with the prior year in most markets.”

For the fourth quarter alone, the company reported a 38-percent rise in net profit from a year earlier.

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