Volvo Denies Talks With VW Involve Merger

Rumors of a major deal between Volvo and Volkswagen were quashed Friday when the Swedish vehicle maker said it was not in talks beyond the current cooperation on diesel motors.

“There are no more concrete discussions about cooperation with Volkswagen than on the diesel motor side,” Volvo spokesman Stefan Lorentzson told Reuters.

Volvo and VW’s share price rallied sharply Wednesday on news the chief executives of the two vehicle makers met in Sweden on June 26, triggering market speculation of a cooperation deal or merger of some kind.

VW, Europe’s largest auto maker, has been on a buying binge. It acquired Rolls-Royce Motor Cars Ltd., a deal it closed on Friday, and last month announced an agreement to acquire Italian sports car maker Lamborghini.

Lorentzson declined to comment on the nature of the talks between Volvo’s Leif Johansson and VW’s Ferdinand Piech but said there would be no more concrete talks on anything other than the current area of cooperation.

Swedish business daily Finans-Tidningen on Friday quoted a source close to the discussions as saying a VW-Volvo merger was never on the drawing board.

Lorentzson said there would be more meetings between the two companies and Johansson and Piech in the usual cooperation between the groups.

Volvo buys its diesel motors for some of its cars from VW’s Audi unit.

Analysts said VW is interested in expanding from lightweight trucks into the medium and heavyweight market and Volvo seems to be a suitable partner.

Volvo is one of the world’s biggest truck makers, delivering 68,980 medium-heavy trucks in 1997. Its truck sales amounted to $6.30 billion.

Meanwhile, as VW closed its $780-million deal to buy Rolls Royce Motor Cars, it remained unclear if it can use the luxury car’s brand name and trademark.

British jet-engine maker Rolls-Royce said it still controls the Rolls-Royce brand name and logo under a deal struck when the two Rolls-Royce companies were separated in the 1970s.

Rolls-Royce would not say whether it would try to block VW’s use of the name or whether it might try to force the German company to pay for the right. Rolls-Royce spokesman Martin Brodie said the companies have not had any detailed discussions.

Associated Press and Reuters were used in compiling this report.