Ford Looking To Sell Volvo, Finally

Ford has announced that it is now looking to sell off its Volvo premium brand, once the centerpiece of its Premier Automotive Group that at one time included Aston Martin, Jaguar, Land Rover, even Lincoln for a time. Unfortunately, the sale is not being made out of some grand strategic move to dominate the market, but rather as a way to shore up its finances and pay the bills. While not in as dire a situation as GM, Ford has enough cash on hand to see it through most of 2009.

The Swedish auto maker cost Ford $6.45 billion in 1999, part of a 1990s buying spree when Ford actually had extra money in the bank. Even though Ford has been going through a very rough patch and numerous restructurings for several years now, its always stated that Volvo was a core brand that was not up for sale. Being that Ford engineered several of its own cars on Volvo derived platforms, and invested in Volvo’s already excellent reputation for safety, it was somewhat believeable when Ford said it wasn’t for sale. But very bad times at Ford, and poor sales at Volvo have changed all that.

Should Volvo owners be worried about a sale? In the short-term, not at all as parts and service would continue to be available at existing dealers. Selling your car private party should be fine as well as long as Volvo can survive and prosper independently, the buying public usually stays away from orphan cars. Long-term, the only thing to worry about is the company itself. Volvo’s sales right now are tiny, and the brand would probably not survive long without being part of a larger corporate entity.

Press Release

FORD MOTOR COMPANY ANNOUNCES IT WILL RE-EVALUATE STRATEGIC OPTIONS FOR VOLVO CAR CORPORATION

DEARBORN, Mich., Dec. 1, 2008 – Ford Motor Company [NYSE: F] 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.