Outlook: Gothenburg finds its sugar daddy

HOWDY Y'ALL over there in Gothenburg. Bill Ford's the name. That's a mighty big clue in case ya hadn't alrehdy geyssed. Ma people tell me you bin lookin' for a sugar daddy and I'm here to say ya sure as hell found one. Let's say $6.5bn and you can keep the trucks. Sounds even better if ya say it in crowns, Leif. Let me tell ya I jus' love all that stuff `bout safety and reespect for family values `n' the environment. An' I know you'll rub along jus' fine with the other guys in our lil' old family, Lincoln and Jagwar.

Ford has a history of overpaying for up-market car brands and Volvo is no exception. It has taken Detroit a decade to begin justifying the pounds 1.6bn splashed out on Jaguar and Sweden may prove a similarly long and winding road. The Ford top brass think of Volvo as a luxury marque to set alongside the likes of Jaguar's ravishing new S-class. They have obviously forgotten about the 340, which ranks high in the top 10 list of ugliest cars this century.

But what Volvo has got is a unique identity and a niche and, in the new S and V range, some cars worthy of the name. Ford is just too big and mean to occupy that territory for all its expensive attempts to persuade the world they are buy ing a Ka or a Puma as opposed to a plain old Ford. Nor does it think laterally enough to invent new markets - as Renault Espace and now the Renault Megane have. So instead it buys identities - think of Aston Martin and the AC Cobra, which was also once part of the Ford stable.

Just because Ford has overpaid, it doesn't mean the deal was not worth it. Fiat or Volkswagen would have stolen Volvo from under its nose if only the Swedes could have been persuaded to part with the commercial vehicles division as well.

Because it is about complementary, non-competing brands, the Ford-Volvo deal brings none of the giant-sized headaches that a merger between two volume car makers would create in its wake. For the same reason there is less cost to take out, no matter how clever Ford is in combining purchasing and sharing platforms among different models.

Volvo should fit neatly into a sub-sector below Lincoln and Jaguar. For a start, it attracts a much bigger proportion of women buyers and its drivers are substantially more youthful. In Dearborn, where every marque is really just part of Bill's extended family, they dream of satisfying the up-market aspirations of everyone, dad, mom and junior.

The Volvo deal shows that, these days, size really does matter. At 400,000 units it was too big to command the premium of real specialist brands but too small to survive alone in a world where environmental and technical advances prevent all but the real heavyweights from funding model development.

BMW will have to start looking over its shoulder, if ever the Quandt family could be persuaded to sell. But the European car maker with the more immediate problems is Fiat, now that its obvious merger partner has been gobbled up by the Ford machine.