Volvo Might Sell Volvo Rents Business in North America image

Volvo is considering selling its construction-equipment rental business in North America.

Volvo’s construction-equipment rental business, known as Volvo Rents, is worth between $1 billion to $1.5 billion, according to an anonymous source, but no final decision for the sales has been made yet. There are already several companies and firms interested in the deal. Volvo Rents operates more than 130 North American rental stores and provides equipment for industrial and commercial markets, as well as constructions.

Volvo is considering selling Volvo Rents as it plans to focus on profitability from sales growth. Two years ago the automaker said it aims at reaching increased operating margins at the top of the heavy-equipment industry and in July the automaker sold its aircraft-engine unit Volvo Aero, receiving 633 million pounds ($954 million) for the deal. In January, Volvo said that its plan to buy a 45% stake in Dongfeng’s truck unit will help the company surpass Daimler in global commercial-vehicle sales.

“The strategy that we’ve seen over the past year is that Volvo is trying to exit unprofitable segments or areas,” said Christer Magnergard, an analyst at DNB ASA (DNB) in Oslo. “This is a part of their plan to raise profitability by 300 basis points by the end of 2015.”

Source: Bloomberg