Although prominent investors Jerry York and Kirk Kerkorian have called on Ford to sell its Volvo unit, the America automaker has denied such a plan is under consideration. But major changes at two of Volvo’s key plants in Europe suggests Ford is prepping the Swedish company for a possible sale.
CEO Alan Mulally has privately told top executives he wants to eventually seek a buyer for Volvo, according to sources cited by the Wall Street Journal. This coincides with what Mr. York, a prominent representative of Kerkorian’s Tracinda Corp recently stated. He said he believes Ford will shed Volvo within 18 months.
The cutbacks — which aim to improve profitability at Volvo — could result in nearly 700 layoffs, according to Sweden’s Göteborgs-Posten newspaper. The company will drop one of three shifts at the Torslanda assembly plant — reducing output from 60 cars an hour to 44. No cuts are planned for the Belgium plant where the new XC60 is built.
Volvo reported a loss of $151 million in the first quarter of 2008 — a major reversal from the $94 million profit during the same quarter in 2007. To sell Volvo at the highest possible price point, Ford must first return it to profitability, and that could take twelve to eighteen months. On the other hand, a sale could come sooner if Ford can sufficiently prove Volvo is set for a turnaround.
In January, it was reported that Ford contacted HSBC, Goldman Sachs and Morgan Stanley about a possible sale of Volvo this summer. The plan has been characterized as a “secret” by insiders, but the timeframe could be inaccurate considering the work ahead.
In 2007, there was speculation BMW might acquire Volvo or Alfa Romeo as a front-wheel-drive partner to MINI. BMW later decided neither company would be a good match, so it’s very unlikely BMW will be a part of the bidding for Volvo.
05/20, 10:08 AM
posted by:
Veda
The new S80 is an impressive car at a very nice street price. Hopefully Volvo will be able to find a good parts supplier once it’s out of Ford’s hands.
05/20, 10:38 AM
posted by:
johnnycanuck
Volvo needs a halo car in their lineup. Perhaps something along the lines of the ‘world’s safest sports car’. I realize that’s pretty unlikely given the current prospects, but maybe something for the next owner to mull over. I don’t know why, but I can’t help but feel Ghosn may have something to say before it’s all over.
05/20, 10:40 AM
posted by:
cookie4me
Funny how a manufacturer would wait to increase profitability when contemplating a sale. If they had made the necessary changes long ago, the increased margins would have eliminated any consideration of a sale.
05/20, 11:59 AM
posted by:
xyunya
I think it is a wishful thinking. You cant rape a brand and then expect it to be profitable. Why would Europeans spend more money on Volvo if they can get the same content in Ford? That is were “expensive” money is. On this side of the pond Volvo stuck with collecting cheap dollars for product manufactured with expensive krone. How do you make it profitable? There is no Volvo plant in Mexico. You can build that, but not in 18 months and I doubt that this would elevate the brand and price, i.e. profitability.
I believe that 50-60% of Volvo sales came from US. And Volvo are very nice cars, but they had some cache when it was family run smallish car company. Once it is became Ford, why would one buy it? They do have good station wagon line-up, but expensive and not any better or worse then Lexus, Infinity and Acura luxury CUV/SUV. Their SUV is overpriced and underpowered compare to competition. And I think the same can be said about car line-up. Folks who shed 40-50K for a family car usually don’t street race, but they maybe aware that Volvo at least 30-40 ponies behind Japanese competition and since Ford days quality did not exactly jumped up.
05/20, 12:01 PM
posted by:
stick2clutch
cookie, you’re right… it’s almost like they make it a point to hold on to unprofitable companies. once profitable they get rid of it i think there might be something wrong with that logic.
05/20, 12:03 PM
posted by:
stick2clutch
cookie, you’re right… it’s almost like they make it a point to hold on to unprofitable companies. once profitable they get rid of it. i think there might be something wrong with that logic.
05/20, 1:09 PM
posted by:
howsmydriving
Death to Volvo.
05/20, 2:01 PM
posted by:
DialM4Speed
Oh here we go again huh Ford? Wait till someone wants to buy the products then sell the company off! Yeah makes great sense… not!
05/20, 4:41 PM
posted by:
kitko
In other words, the only profitable part of Ford family is Mazda, which, unlike Volvo Cars (completely under Ford ownership), is only an affiliate, since Ford with around 35% of shares is just a single largest shareowner.
Interestingly enough, Mazda reinvented itself immediately after the departure of Ford’s Mark Fields who turned the company that gave us headturning Mazda MX-3, MX-6, amazing Xedos 6 and 9, and amazing European 323 series (replaced in 1999), into a company still producing excellent and reliable cars, but the cars that were so anonymous and, let’s face it, dull looking, that nobody took any interest in….
Interestingly enough, Mr. Fields was charged with heading Ford’s luxury division comprising, ehm, Volvo and Aston Martin, Jaguar and Land Rover…. Now that’s a resume
05/20, 5:02 PM
posted by:
1c3d0g
Ford’s last mistake would be to sell Volvo. Without them, they are nothing. Ford, don’t do something stupid and regret it later!
05/20, 5:49 PM
posted by:
VictorRaikkonen
^^^ Ford is “nothing” period as far as I am concerned. The mustang is the best looking car in all of their brands, not inclusive of Mazda, and I personally thing the car is ugly as sin. But, when it comes to Volvo, they never made what one could call attractive cars to begin with. Prior to Ford’s acquisition, all of their cars looked as if they crafted the concept car out of legos and then decided to run with it. Anyway, if there is a boring car company that needs to purchase another boring car company, it is Honda’s Acura division.
05/20, 9:49 PM
posted by:
autonut
Victor, I concur that Mustang is the best looking car Ford produces. But it is retro look of a 40 year old car. The program manager for the original was Lee Iaccoca who was so well treated after most successful product lunch he left Ford.