Ford denies plans to sell Volvo, worries persist

Analysts mull implications of Ford without Volvo

Ford Motor Company, responding to reports that it??™s putting its Volvo unit up for sale, said it is not negotiating with anyone to sell the Swedish automaker, The Local reported on July 16.

The Sunday Times, citing unnamed sources in London, said the decision to sell Volvo, which is part of Ford??™s Premier Automotive Group, was made in the past two weeks, but that the timing of the sale had yet to be decided.

Ford spokesman Tom Hoyt said in an interview on July 15 that the company wasn??™t commenting on speculation about Volvo??™s future. But later in the day, he issued a denial that the automaker was in talks to sell the unit. ???To my knowledge, we are not in negotiations with anyone about the future of Volvo,??? Hoyt said.

When Ford last August, 2006 announced it was exploring the possible sale of

its Aston Martin luxury sports car brand, the automaker left open the possibility that other Premier Automotive Group brands, including Volvo,

could be sold.

Ford in December, 2006 finalised a USD 23.4 billion financing package to fuel

its restructuring and cover expected losses in its automotive operations. It pledged domestic plants and other automotive assets as collateral.

No bank had been appointed to handle the Volvo transaction, the newspapers said. The Sunday Times said the deal could be worth USD eight billion. Ford acquired Volvo from Sweden??™s Volvo AB in 1999 for USD 6.45 billion.

Last month, Ford said it was reviewing its position on Premier Automotive Group brands Jaguar and Land Rover, fueling speculation the company was getting closer to selling the brands. Ford sold Aston Martin for USD 848 million in March, with some analysts saying the brand did not fit into Ford??™s long-term survival plan.

The possible sale of Volvo came as the company is struggling to return to profitability in the face of fierce competition from Asian automakers and developing tastes for more fuel-efficient models in its key North American market. It is slashing thousands of jobs and plans to close plants to cut costs.

Ford posted a narrower loss of USD 282 million for the first quarter. The Premier Automotive Group reported a record pretax profit of USD 402 million for the quarter, due largely to Volvo. And Ford has been relying on Volvo, as it tries to globalise its engineering, design and manufacturing systems.

Ford has been wobbling from slow sales and obligations to its workers. Stories in The Wall Street Journal and New York Times quoted analysts and company sources as saying the sale was being considered. But like an earlier round of similar stories in May, Ford dismissed the reports, dpa reported.

???Ford is not in discussions with any companies in relation to selling Volvo,??? a company spokesman told the Journal. ???As we've been saying since last year, we continue to assess all of our operations and are looking at our strategic options.???

The Journal quoted unnamed company sources as saying the deliberations were in an early stage, and that the idea of selling the brand had a ???50-50 chance of happening.??? Earlier this year, there were reports that BMW had flirted with buying a share in Volvo, but the signals had cooled down.

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