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Volvo employees must be feeling a little confused because Ford’s plans to sell its Swedish manufacturer have taken yet another turn: the blue oval now intends to keep Volvo.

Ford released its third-quarter earnings report today, noting a strategic plan for Volvo’s road to financial recovery. Although there was no reference of a long term outlook for Volvo within the Ford ranks Ford  chief executive Alan Mulally said Ford no longer urgently wanted to rid itself of the Swedish marque .

“Our plan now is not to sell Volvo but to improve its cost structure and brand positioning. I think we can do substantially better than where we are today, “ Mr Mulally said.

It appears that while Ford is not ruling out a sale at the right price, it wants Volvo to operate more independently, giving Ford room to recover from its financial woes. The plan involves:

  • Enhancing Volvo’s position as a global maker of premium vehicles
  • Establishing appropriate business arrangements between Volvo and Ford-brand operations to let Volvo operate more independently
  • Getting more efficiencies between Ford-brand operations and Volvo in areas such as product development and purchasing
  • Disclosing Volvo’s financial performance beginning with 2008 results.

Volvo hasn’t exactly made it self a great acquisition either, the company posted an estimated $100 million loss in the third quarter of 2007.

Ford set up its Premier Automotive Group (PAG) with Volvo, Jaguar and Land Rover in 1999 to expand its market share, a plan which did not eventuate. Ford is still planning to sell Land Rover and Jaguar.




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