| Ford may sell Volvo, its last European brand | |
| Bloomberg / Michigan December 2, 2008, 0:57 IST | |
The automaker has said it isn’t immediately seeking US aid.
Ford Motor Co said it may sell its Volvo unit, the company’s sole remaining European brand, a day before the automaker is scheduled to present a survival plan to US lawmakers.
The review of options for Volvo probably will take several months, Dearborn, Michigan-based Ford said today in a statement. Shedding the Swedish unit would complete the unwinding a two- decade strategy of diversifying by buying European luxury brands. Volvo, acquired in 1999 for $6.4 billion, was retained after a similar evaluation last year.
Ford, General Motors Corp and Chrysler LLC are to present plans tomorrow demonstrating why they should get US financial assistance and that they can be viable businesses. Volvo was once central to a failed Ford strategy to reap a third of its profits from luxury autos in 2006.
“All of these businesses are being forced to reveal their hand,” Maryann Keller, an independent auto analyst and consultant in Greenwich, Connecticut, said in an interview.
Ford, the second-largest US automaker, said it decided to reevaluate Volvo “in response to the significant decline in the global auto industry particularly in the past three months and the severe economic instability worldwide.”
Ford rose 24 cents, or 8.9 per cent, to $2.93 at 10:52 am in New York Stock Exchange composite trading. The percentage gain was the largest today in the Standard & Poor’s 500 Index.
The automaker has said it isn’t immediately seeking US aid, while wanting to be able to draw upon such assistance if it runs out of cash. Detroit-based GM, the biggest in the US, has said it may run short of funds for its operations this year.
Ford began buying European automakers in 1987, when it purchased a controlling interest in UK-based Aston Martin. Ford acquired Jaguar in 1989 and Land Rover in 2000. The US company sold Aston Martin for $931 million in May 2007, and Jaguar and Land Rover in June of this year for $2.4 billion
The automaker has been shedding its European brands under Chief Executive Officer Alan Mulally, recruited from Boeing Co in 2006. Mulally is integrating regional units and focusing on marketing the company’s namesake brand, under a plan called One Ford.
Ford has lost $24 billion since 2005, the last year it had an annual profit. This year’s credit crisis and recession spurred Ford to retreat from a target of returning to profit next year.
“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,” Mulally said in today’s statement.
Volvo’s third-quarter pretax loss widened to $458 million from $167 million a year earlier, as its sales declined 24 percent to $2.9 billion. The Gothenburg, Sweden-based unit tripled its planned job cuts to 6,000 in October and said November 8 that it was in talks with Sweden’s government about potential financial support.
In September, Ford named Stephen Odell as Volvo’s CEO, the first non-Swede to head the carmaker.
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