Dec. 4 (Bloomberg) -- Ford Motor Co. may seek to sell Volvo for as much as $6 billion, close to what it paid for the Swedish carmaker 10 years ago, and is using JPMorgan Chase & Co. as an adviser, people with knowledge of the plan said.

Ford, which bought Volvo for $6.4 billion in 1999, is counting on the strength of the brand to draw bidders, said one of the people, who declined to be identified because the target price isn’t public. Gothenburg-based Volvo ranked No. 1 for safety in an independent U.S. Consumers Union survey in January.

Under pressure to secure a $9 billion backstop from the U.S. government, Ford may not meet its price target, said Ferdinand Dudenhoeffer, director of the Center for Automotive Research at the University of Gelsenkirchen in Germany. Bidders may also be limited to Chinese carmakers, buyout firms or a group arranged by the Swedish government. Renault SA of France isn’t interested, said a spokeswoman, Frederique Le Greves.

“Anything other than a heavily discounted sale seems unrealistic,” said Dudenhoeffer. “For a buyer it’s the best time that one could wish for. But it’s not ideal for Ford.”

Taking Action

Ford said Dec. 1 it may sell Volvo as it seeks to show Congress it’s taking action to cut expenses and return to profit. Ford, General Motors Corp. and Chrysler LLC are asking the U.S. for $34 billion in aid as the recession and credit crisis erode sales. Dearborn, Michigan-based Ford has lost $24 billion since 2005, and Chief Executive Officer Alan Mulally in May abandoned a target of earning money next year.

Mulally, in an interview on Dec. 2, declined to say how much Volvo may fetch or whether Ford had retained JPMorgan to sell the unit. He called the firm one of the automaker’s bankers and a “key partner.”

Ford fell 19 cents, or 6.7 percent, to $2.66 at 4:01 p.m. in New York Stock Exchange composite trading. The company’s Caa1 rating on $26 billion of debt, seven levels below investment grade, was reaffirmed by Moody’s Investors Service yesterday. GM and Chrysler’s ratings were cut two levels to Ca from Caa2.

Among buyout firms, Fort Worth, Texas-based TPG Inc. may be interested in Volvo, according to a person familiar with the situation. TPG, which has more than $50 billion of capital under management, was among four private-equity companies to make preliminary approaches for Jaguar and Land Rover last year before Ford sold the businesses to Tata Motors Ltd. of India.

Raising Debt

Buyout firms are likely to struggle to raise the debt needed to finance a takeover as investors shun all but the safest assets after the credit crisis.

Volvo’s third-quarter pretax loss widened to $458 million from $167 million a year earlier as sales declined 24 percent to $2.9 billion. The unit tripled its planned job cuts to 6,000 in October and said Nov. 8 that it was in talks with Sweden’s government about potential financial support.

Bids are unlikely from European automakers such as Volkswagen AG, Fiat SpA, Bayerische Motoren Werke AG and Daimler AG, which have their own luxury brands. That may force Ford to look to Asian manufacturers, said Pete Kelly, senior director at J.D. Power Automotive Forecasting in Oxford, England.

“As an overall brand, Volvo still has a lot of value,” Kelly said. “Its reputation for safety is still very strong. Volvo’s problem right now is that it’s very dependent on the U.S. and Western Europe, the two fastest-falling markets.”

Chinese Options

SAIC Motor Corp., China’s largest automaker, may be interested in Volvo, though it may “lack the capacity and sophistication” to make buying Volvo a realistic option, Kelly said. SAIC paid $116 million for the design rights to defunct U.K. manufacturer MG Rover Group Ltd.’s Rover 25 and 75 models in 2005. The Shanghai-based company declined to comment.

Dongfeng Motor Group Co., China’s No. 3 automaker, may also be a potential bidder. It has been approached by investment banks seeking to sell assets from GM, owner of the Hummer, Saab and Saturn brands, said Hu Xindong, head of investor relations. He wouldn’t comment on Volvo.

A bid from South Korea’s largest automaker, Hyundai Motor Co., can’t be ruled out, though would be “quite a surprise,” Kelly said. Hyundai Motor is not interested in buying Volvo, spokesman Jake Jang said in Seoul. Japanese are unlikely to become involved as they tend not to expand via acquisitions, University of Gelsenkirchen’s Dudenhoeffer said.

Without an industrial buyer, pressure may increase on the Swedish government to assemble a group of local investors to protect a local workforce that totaled 17,616 last year. Some 70 percent of Swedes want the state to become a temporary owner should Ford fail to secure Volvo’s future, according to a survey of 1,000 people by the Swedish Association of Graduate Engineers.

Not Normal

“This is not a normal crisis, and if it all fails it will have incredible consequences,” a spokesman, Peter Larsson, said in a statement on the association’s Web site.

While Sweden has declined to provide direct aid to Volvo or GM’s Saab, “we will gladly help them get a new owner,” Finance Minister Anders Borg said yesterday at a press briefing.

“I don’t think it’s a realistic and possibly even a feasible idea that the state becomes an owner,” Borg said. “An industrial company should have industrial owners. We will gladly help with measures that secure the future of the car industry.”

Sweden may call on the Wallenberg family, whose Investor AB and family foundations hold board seats on about a third of the country’s 30 largest listed companies, as “a possible savior,” said University of Gelsenkirchen’s Dudenhoeffer.

The Wallenbergs may also be a potential buyer for Saab, which Investor sold to GM in two steps between 1989 and 2001. GM said yesterday it’s considering all options for Saab as part of a “global strategic review.”

Volvo AB, the world’s second-biggest truckmaker after Germany’s Daimler, is keen to protect the brand name it shares with the carmaker but isn’t willing to buy back the division.

“We’re not interested in Volvo cars from an investor point of view,” said Maarten Wikforss, a spokesman for the Gothenburg-based truckmaker. “The analysis we did when we sold the car unit almost 10 years ago remains the same.”

To contact the reporters on this story: Ambereen Choudhury in London at achoudhury@bloomberg.net; Chris Reiter in Berlin at creiter2@bloomberg.net.

Last Updated: December 4, 2008 16:15 EST