Ford to consider selling Volvo
2 Dec, 2008
14 Comments 
This has been a long time coming but Ford Motor Company has today officially announced that it’s considering the sale of its Volvo Car Corporation unit under review and “strategic options” for the loss-making Swedish brand.
Tough times have hit Ford hard with the US car maker in serious need of cold hard cash. This has led the Blue Oval to consider the sale of Volvo with the final decision expected to take several more months.
Ford has owned the Swedish manufacturer since 1999 after it paid an enormous $6.45 billion. Currently Volvo isn’t doing all that well, in the first nine months of this year it posted an operating loss of $US729 million, compared with a loss of $US164 million for the same period in 2007.
The sale of Volvo would mean Ford would have very few brands under its wings. The company offloaded luxury Jaguar and Land Rover brands to India’s Tata Motors Ltd earlier this year following the sale of its stock in Aston Martin while it has also agreed to sell about two-thirds of its 33.4 percent stake in Japanese automaker Mazda Motor Corp for around $538 million.
“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, (but) given the unprecedented external challenges facing Ford and the entire industry, it is prudent for Ford to evaluate options for Volvo,” Ford CEO Alan Mulally said in a statement.
However Ford says it will not sell Volvo as a measure of desperation. The company will consider a partial sale or joint venture or if the right buyer doesn’t appear in this tight credit market, Ford could keep Volvo and aim for better results from a leaner operation.
Ford began a restructuring for Volvo in November 2007, part of which includes eliminating about 6000 jobs.
What does the future hold for Volvo?
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December 2nd, 2008 at 12:52 pm
’tis a shame for what is really a good car (I’ve had 5), though volvo labours under a poor image, worse marketing, and in my experience at least, the most disinterested salespeople that I have encountered. They are pretty well thought of in the US and Asia at least, so there is probably life in them yet, but they need a strong mid sized car, and the s60 is now getting on 8 years old with no R version anymore, and 2010 for the replacement is probably a little far away. At least the news is unlikely to make them depreciate any faster - I generally lost 40% plus after 2 years.
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December 2nd, 2008 at 3:01 pm
Like so many Euros charge a premium price for budget FWD vehicles. Should have stayed RWD like BMW.
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December 2nd, 2008 at 3:44 pm
Ford has run yet another solid make into the ground. Turned a company worth 6.45Bn into a company losing bucketloads of cash, and without a relevant current product range.
Who would want to buy it?
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December 2nd, 2008 at 4:01 pm
Lets see if this comment stays here……..
Volvo IIRC was like Mazda and suffering poor sales and lack of product growth before Ford came along. However (unlike Saab and GM) under Ford they grew to desirable and good looking not just reliable Kellogs box’s.
What I said before (it is not a shot at this sight for reporting on what’s happening) But this Sale of Volvo has been floating around for a couple of years now and the usual comment from Detroit is they would consider to the right buyer.
(sorry mods but if you have an issue with that, as it has been bandied about when the comments of selling Aston and J/LR were first started, please let me know)
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December 2nd, 2008 at 4:42 pm
reckless1…
You have got that incorrect.
Frontman has it right…
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December 2nd, 2008 at 7:31 pm
Yeah reckless for once you’re way off. I also see it how Frontman does.
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December 2nd, 2008 at 8:25 pm
Good move Ford, sell the farm, build your new Fiesta in crappy Thailand, what next ?
Ford is gone……
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December 2nd, 2008 at 8:36 pm
I’ve always been a Holden guy, but i have infinitely more trust in Ford’s ability to build a quality product.
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December 2nd, 2008 at 8:51 pm
anything is for sale for the right price,
and thats all this is saying.
the key word if any sale happens is “strategic”.
my money says if ford do find the right buyer for the right price, that they will stipulate terms that see continued developmental cost sharing along with maintaining control like the clever way they raised some loot from mazda.
those in the industry are praising how Mulally is going about raising the cash to secure fords future
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December 2nd, 2008 at 9:32 pm
It comes down to American corporate culture aiming for quarter by quarter repeated profit returns for shareholders. Somehow I think if Volvo management was left to its own devices the results would be quite different. It might be a smaller operation but perhaps more profitable and efficient - why do manufacturers think they need a product in every market segment or try to create one like the BMW X6 (godawfully ugly and completely unecessary).
I bet Volvo were far more profitable when they were producing the 144/164 with one or two variants.
If most of Volvo’s vehicles are based on Ford platforms and running gear then the differentiation is not significant. Might be more efficient but not really Volvo.
Perhaps we will see more marques disappear.
And yes I had a 244 with overdrive for awhile and it was great for its era compared to the Kingswood and XE Falcon which I also owned.
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December 3rd, 2008 at 12:02 am
I think it seems like Ford is becoming the cheap Volvo rather than Volvo being known as an upscale Ford. It’s probably poor strategy which is the same reason why they had to let go of Jaguar. It’s not a good idea to share engines and chassis components, such that the Focus XR5 Turbo is simply a bargain S40. It’s also hard to justify an S80 over an equally luxurious, safe but way cheaper Falcon G6E Turbo. When it comes to true European luxury, you’d turn to BMW or Mercedes.
During the 90s, Volvos were renowned for their safety, leagues ahead of the others. But now, lots of cars can get the perfect 5-star rating, which means many other brands have caught up already. And given that fact that they aren’t as fun to drive as German cars, there’s a need to come up with something new in order to remain a strong brand.
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December 3rd, 2008 at 12:44 am
Thanks for your support Adam and Bob, but can you explain why I’m wrong - the article says the company was purchased for 6.45 billion (assume $US).
Last year it made a $US164M loss, and this year it has made a $US729M loss. That’s a serious J curve in the wrong direction.
With the Global economy as it is right now, the Volvo company in it’s current money bleeding state would have to be worth at auction -
$US”enter your bid here”
What are we offered - start us somewhere - can I see $100 -how about $1.00 - any offer? Any Bid?
Tough luck Ford - can’t sell - you’ll just have to keep bleeding more money - maybe only $US1.5Bn loss next year.
Maybe give it away to Sweden before it’s too late. Plenty of cars and their manufacturers are vanished; ther’s no reason why Volvo needs to stay. There is an equally good or better alternative for every Volvo model.
RIP Volvo, you can hang out with Riley, Morris, “insert bygone vehicle here”.
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December 3rd, 2008 at 10:08 am
What company is thriving at the moment!!??
At the same time Ford bough Volvo is was itself making record profits…
Toyota has lost 70% of thier operating profits in NA alone.
The financial meltdown is affecting EVERYONE, to single out one or two companies is simply short sighted.
Ford did not kill Volvo, that’s where you are wrong.
Volvo is suffering like other’s Ford simply can’t tip bucket loads of cash into Vovlos while they fight for thier own survival.
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December 3rd, 2008 at 11:53 am
Reckless, with Volvo you also have to look at the product releases it has had over the past 4 years and ask yourself how much of the loss has been derived by developement costs?
Also again compare Volvo to SAAB. Both bought by their respective owners around the same time, but on Volvo has really evolved.
As to the product sharing and Ford bieng a cheap Volvo etc, I see this as a good thing both ways, firstly enhancing Fords product, secondly proving the reliability and cost of Volvo. Look at VWAG from Skoda all the way through Audi.
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