Ford announced today it is officially looking to sell Volvo, the premium Swedish automaker that the company acquired in 1999 and made an important part of its Premier Auto Group (PAG). Oh what a difference a decade makes. Ford paid $6.45 billion in 1999 dollars for the automaker in a fierce bidding war with Volkswagen AG and Fiat. In preparation for a sale Volvo will be made more of a stand-alone company. Volvo was the last of the PAG brands left after Land Rover/Jaguar were sold to Tata and Aston Martin was sold to an investment firm. Why sell the company? In the midst of a bad market the company's slumping sales are a thumb on Ford's already heavy scales. Who would buy Volvo? Why not Volkswagen or Fiat? Both companies could pick it up for an amount we assume is less than $6.45 billion. Press release below the jump.
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.