Ford to sell off Volvo
BY TERRY MARTIN | 2nd Dec 2008
Announcing the decision ahead of November sales figures for the US, which are expected to show another significant sales decline – this time to the tune of 33 per cent for Ford and 25 per cent for the industry – CEO Alan Mulally said the company was conducting a strategic review “in response to the significant decline in the global auto industry, particularly in the past three months, and the severe economic instability worldwide”.
He said the Volvo review was in line with a “broad range of actions” the American auto giant was taking to “strengthen its balance sheet and ensure it has the resources to implement its product-led transformation plan”.
This includes seeking urgent bailout funds from the US Congress.
“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 Mr 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.”The moves comes just weeks after Volvo announced a further 4000 job cuts in October, in addition to 2500 announced in June.
Under the leadership of former Ford of Europe chief operating officer Stephen Odell since October 1, Volvo also last month incurred a sales fall of 28 per cent.
The company posted a pre-tax loss of $US458 million ($A720 million) in the third quarter of 2008, and through nine months had incurred an operating loss of $US729 million ($A1.15 billion).
Ford, which bought Volvo in 1999 for $US6.5 billion, said the review could take several months to complete.
The Swedish marque is the last remaining brand in the former Premier Automotive Group, which included Aston Martin, Jaguar and Land Rover.