Ford May Now Sell Volvo

Another shoe drops…

By Brendan Moore

12.01.2008

Beset by increasingly bad financial news, Ford stated earlier this morning that a sale of Volvo is now being considered.

Ford has tenaciously tried to hold on to Volvo as their overall business has collapsed all around them, as company executives view the Swedish subsidiary as one of the crown jewels of the Ford family, but it appears that events have conspired to make the retention of Volvo unlikely.

The Swedish government reported earlier that it has been in discussions with both Ford and GM about assistance to Volvo and Saab respectively. There was no other comment regarding those talks.

The official press release from Ford:
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DEARBORN, Mich., Dec. 1 — Ford Motor Company announced today it will re-evaluate strategic options for Volvo Car Corporation, including the possible sale of the Sweden-based premium automaker.

Ford said the decision to re-evaluate strategic options for Volvo comes in response to the significant decline in the global auto industry particularly in the past three months and the severe economic instability worldwide. The strategic review of Volvo is in line with a broad range of actions Ford is taking to strengthen its balance sheet and ensure it has the resources to implement its product-led transformation plan.

“Given the unprecedented external challenges facing Ford and the entire industry, it is prudent for Ford to evaluate options for Volvo as we implement our ONE Ford plan,” said Ford President and CEO Alan Mulally. “Volvo is a strong global brand with a proud heritage of safety and environmental responsibility and has launched an aggressive plan to right-size its operations and improve its financial results. As we conduct this review, we are committed to making the best decision for both Ford and Volvo going forward.”

Ford said the review likely will take several months to complete. In the meantime, Ford will continue working closely with Volvo as it implements its restructuring plan under CEO Stephen Odell, who was appointed to lead Volvo earlier this year.

At the same time, Ford and Volvo will continue to put in place processes that allow Volvo to operate on a more stand-alone basis in the absence of the Premier Automotive Group structure, an effort which began in November 2007 following a previous review by Ford of strategic options for Volvo.

“Outstanding safety, an increased focus on environmentally friendly vehicles and contemporary Scandinavian design will continue to be the foundation upon which we will build a strong Volvo business for the future.” Odell said. “We intend to build upon our strong brand heritage and to appeal to our global customers with vehicles like the new XC60 — the safest car Volvo has ever built. Volvo also will introduce seven low-emission models in 2009, giving us the best environmental product range in the premium segment.

“We have a strong brand presence in Europe, North America and the Asia Pacific region, and are growing in key markets such as China and Russia, where we are the leading premium brand.”

Ford Motor Company, a global automotive industry leader based in Dearborn, Michigan, United States, manufactures or distributes automobiles in 200 markets across six continents. With about 224,000 employees and about 90 plants worldwide, the company’s core and affiliated automotive brands include Ford, Lincoln, Mercury, Volvo and Mazda. The company provides financial services through Ford Motor Credit Company. For more information regarding Ford’s
products, please visit www.ford.com .

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COPYRIGHT Autosavant – All Rights Reserved

Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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7 Comments

  1. Too bad it took them this long to make the decision because now the buyers will be fewer and the selling price will be lower.

  2. I never saw what was so critical about Volvo that Ford held onto them in the face of mounting difficulties. Yes, they got a lot of technology from Volvo, including the platforms for the MKS, Flex, Taurus, Sable, etc., but they now have that intellectual property. To me, Volvo falls under the “nice to have” category rather than “critical to Ford’s survival as a going concern” one.

    And as far as GM keeping Saab, same story, except of course GM’s situation is more desperate, so it should unload Saab ASAP if a buyer can be found.

  3. Mark my words, VW will be the buyer when the dust settles.

  4. I doubt VW might be the buyer since they already have a big portfolio of various divisions in Europe like Audi, Skoda, Seat, Lambo, Bentley. However there might be other players we don’t suspect, some folks on Autoblog and Jalopnik think then Fiat might be a interesting candidate, so they can use the Volvo dealer network to be the entry door for Alfa-Romeo.

    Volvo Trucks (which Renault own a stake of 20%) isn’t interested to bring back Volvo cars under their umbrella. http://www.autoblog.com/2008/11/30/volvo-not-interested-in-buying-back-volvo-cars-from-ford

  5. I always thought BMW would be a good fit. It would be a way to reduce BMW’s costs by spreading R&D investments over a broader range –without having to partner with arch-rival Daimler. BMW would keep Volvo front-drive to prevent overlap with the mother brand, of course, but they would also benefit from Volvo’s safety technology, as Ford has. The S80 uses an inline-six, so that’s another natural fit, even if BMW purists might be appalled.

  6. Ford should have sold Volvo last year. There is no proffit in a major auto manufacturer hoding onto a niche product like Volvo. Ford has the platforms, and there is no ecconomy of scale working here.

    The bigest issue is marketing. Volvo is a “premium” viehicle, but it’s not a luxury viehicle (e.g. Lincoln), nor is it a sport’s viehicle (BMW). It does not even have a reputation for being a “good” (i.e. quality) car, as much as it’s known as a “safe” car.

    BMW is the perfect fit. BMW can benifit from Volvo’s safet technology, and Volvo can benifit from BWMs styling and performance tech. If they can design a unibody archetecture that will accept either FWD or RWD they can sell the BMW version with RWD and the Volvo version with FWD. “Free Tibet” bumber sticker optional.

  7. Ford’s foreign affairs are ending badly, eh?

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