Times are tough for the Big 3 and each automaker is trying to figure out ways to raise revenue. Ford announced today that the automaker is reevaluating its options for the Volvo brand.
Ford is being forced to reconsider selling Volvo dues to the significant economic decline in the last few months. Ford says it's going to be a few months before Ford makes a decision about Volvo. In the meantime Ford is going to work with Volvo to allow it to operate on a more stand-alone basis.
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.
Safe Harbor
Statements included herein may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on expectations, forecasts and assumptions by management and involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those stated. We cannot be certain that any expectation, forecast or assumption made by management in preparing these forward-looking statements will prove accurate, or that any projection will be realized. More detailed information about these and other factors that could affect future results is contained in our filings with the Securities and Exchange Commission. Our forward-looking statements speak only as of the date of their initial issuance, and we do not undertake any obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events or otherwise.
Comments (15)
Sounds like a great plan to me... Ford has been driving Volvo into the ground since they acquired them in '98. Basing an entire LUXURY brand on FWD is ludicrous.
Posted by nashville940t | December 1, 2008 11:56 AM
Posted on December 1, 2008 11:56
Volvo also has AWD models, but the rear wheels only kick in when they are rotating at a slower speed than the front.
AWD might still not be your idea of luxury, but probably more so than FWD.
Posted by BigO | December 1, 2008 12:43 PM
Posted on December 1, 2008 12:43
WOW! Looks like TR might not be dead after all.
Posted by 426Hemi | December 1, 2008 12:45 PM
Posted on December 1, 2008 12:45
If Ford sells Volvo, that would be good grounds to bring back a rear wheel drive retro 240. They retrod the Mustang, Camoro, and others so why not a 240? Put in a turbo 5 or twin turbo 6 with a 5 or 6 speed and rear wheel drive with the 240 boxy styling, and sign me up. I bet there are ton of people that would love to see this happen since there is such a huge 240 following.
Posted by CSq | December 1, 2008 1:53 PM
Posted on December 1, 2008 13:53
"Basing an entire LUXURY brand on FWD is ludicrous."
That formula worked for Toyota for many years until Lexus got it's footing. Hell, even worse. They were just re-badging Toyo's back then too.
I only get to work on Volvo's occasionally, but i can say for sure that Ford's influence isn't seen in Volvo's the way that it showed in Jaguar. Or the way Saab got GM'ed to the point where even their dyed-in-the-wool followers slowly faded away.
XC90's sell well in my corner of the country. And if i had to drive a Volvo everyday, i wouldn't complain.
We have an older woman that drives a 240 (i think) CSq, and comes into our shop a couple times a year. Damn thing is built like a potbelly stove. It's not a pretty car anymore, but we're sure they're gonna bury her in it. It just won't die.
Posted by Trooper Bri | December 1, 2008 2:33 PM
Posted on December 1, 2008 14:33
now, who would be interested to buy Volvo?
Silly Ford people think it is 'news' when they wanna sell something. I think it is news when someone wants to BUY it.
I could only think of Hyundai and a large Chinese company....
Posted by lowest iq | December 1, 2008 8:54 PM
Posted on December 1, 2008 20:54
nashville940t, Ford has been driving Volvo into the ground, is that a joke? Volvo was on a steady decline long before Ford bought that car company. Why do you think Volvo sold its car fleet to Ford in the first place? It wasn't like Volvo was making money when they sold their car fleet to Ford.
Posted by SteelCity1981 | December 2, 2008 12:32 AM
Posted on December 2, 2008 00:32
Actually, Volvo Automobiles were making money when Ford bought the automobile production and rights to co-own the brand from Volvo Group (still doing units for construction, trucking, etc.) in '99.
As far as I know, the sale was part of the global trend of consolidating production and marketing in the ever increasingly competitive market. Small producers could no longer be strong enough alone. Costs for research and development were also growing.
Volvos became more expensive to sell in the US because the dollar weakened against the Swedish krona since 2002. That helped trigger a 24% slide in demand from 2004 through 2007, and US sales fell an additional 28% this year through October.
Now the dollar goes up again (at least temporarily), but that's another story...
Posted by Mech | December 2, 2008 1:21 AM
Posted on December 2, 2008 01:21
same thing here with lowestiq, who is going to buy volvo?
if it is an asian company, then it won't have a lot of money and the money Ford is going to get is minimal. Ford can live through, although barely.
Posted by adrian | December 2, 2008 5:03 AM
Posted on December 2, 2008 05:03
Yeah.. all those Asian companies.. broke as broke can be. Where exactly have you been living for the last 5 years under a rock at the bottom of an ocean on MARS?!
Odds are strong that Tata would be the most likely buyer, to complete the Aston/Rover/Volvo trifecta. Aston is still a silly 'halo' purchase, but Rover/Volvo are an excellent combination for a company with money looking for established brands.
Ford should sell Volvo and give the Mercury name rights away as a "special bonus".
Pare down to Ford and Lincoln and spend the right money. Quality is there, people may be too blind to accept it, but that doesn't change the fact.
Build a couple more cars that aren't the Flex, buy Jeep and the Ram business (mostly for the Cummins contract) when Cererbus gets REALLY sick of Chrysler. Convert the Ram trucks into Jeeps and you have a company that GM and Toyota wishes they were.
Posted by not adrian | December 2, 2008 7:39 AM
Posted on December 2, 2008 07:39
GM should do the same as ford... SELL some of their shares instead of stealing billions out of the average american!
Posted by jettto | December 2, 2008 10:01 AM
Posted on December 2, 2008 10:01
Mech their car sells weren't competetive in North America and in other parts of the world which lead Volvo to sell their car division to Ford. If Vollvo was selling as well as other imports then Volvo wouldn't have sold their care division to Ford.
Posted by SteelCity1981 | December 2, 2008 2:59 PM
Posted on December 2, 2008 14:59
I remember so many car journals praising the changes that came to Volvo after Ford bought them. The could finally afford so decent design artists who design something other than ugly square boxes.
Volvos sold on being safe not pretty but by that time, the Ford Taurus had one of the highest safety ratings and weighed like 1000 pounds less. Ford shared their safety engineering with Volvo and they were able to shave some weight.
Posted by Tom T | December 2, 2008 8:28 PM
Posted on December 2, 2008 20:28
I say bring back the "ugly" square boxes. I for one love the old 240s and think they still are one of the best cars ever. I wouldn't trade mine for anything. More reliable than toyota or honda and should be more than able to rack up over a million miles and Ford had nothing to do with it. It's time for Volvo to bring back the 240 and regain its glory!
Posted by CSq | December 2, 2008 8:43 PM
Posted on December 2, 2008 20:43
SteelCity1981, sure they struggled big-time.
In the first nine months of 1999 Volvo net profit dropped to $679.9 million from $1.1 billion in the period a year earlier, despite a 15 percent increase in sales. Still their net operating margin was about 4.2%, so technically they were making money.
Compare i.e. to Ford net operating margin from 1999-2007: 11.4%, 10.4%, 2.1%, 6.0%, 4.9%, 6.2%, 4.0%, (5.1%), 3.3%
Actually, Fords profitability in the same period, with total net margins of
4.5%, 2.0%, (3.4%), (0.6%), 0.3%, 2.0%, 1.1%, (7.9%), (1.6%)
- rather bad. (%) is NOT making money...
SO, it seems even big F has struggled with competition and costs. OR, the slightly more funny answer is that Ford bought Aston Martin, Jaguar, Land Rover, Volvo etc. and at the same time forgot they had nice Fords in Europe they could sell in the US. Saving on the wrong things, anyone? But let's look at the bright side for a moment; luckily, they didn't buy Saab (GM) or Chrysler (Cerberus). Broke GM starved Saab model development for years, and look at the sales. Why anyone would buy Chrysler from Daimler is a mystery.
Enter investment banking. Oaaahhhhahahaaahahahaha!
Posted by Mech | December 3, 2008 5:55 AM
Posted on December 3, 2008 05:55