Ford Considers Selling Volvo

Automaker Had Denied Earlier Buzz That Brand Was on the Block

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DETROIT ( -- Volvo may end up on the block after all.

Ford Motor Co., which with the rest of the Detroit automakers is readying a plan to take to Congress this week to win a federal loan, said today it "will re-evaluate strategic options for Volvo Car Corp., including the possible sale" of the premium automaker. Ford said it will take several months to review Volvo's options.
Despite new lineup that includes the C30, Volvo's sales are down.
Despite new lineup that includes the C30, Volvo's sales are down.

"Given the unprecedented external challenges facing Ford and the entire industry, it is prudent for Ford to evaluate options for Volvo," President-CEO Alan Mulally said in a prepared statement. "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."

Havas' Arnold Worldwide and independent Nitro, London, won Volvo's estimated $150 million global account last year and developed the brand's new global tagline, "Life Is Better Lived Together."

When it released third-quarter results last month, Ford said Volvo tallied a pre-tax loss of $458 million for the period, compared with a loss of $167 million a year ago. Volvo's global third-quarter revenue slid to $2.9 billion, down from $3.8 billion in the same period of 2007. Ford also announced at the time that Volvo planned to cut 6,000 employees worldwide.

Volvo significantly expanded its lineup in recent years, adding among other models the XC90 SUV and entry-premium C30 hatchback. But the brand's broadened lineup hasn't boosted sales.

"Volvo had to share the pain" when times get tough for Ford, including significant budget and manpower cuts, said Robert Austin, founder of consultant Auto Futures Group. He called Volvo's C30 "the best-kept secret in Volvo's history," noting that the marketer didn't have the money to properly launch the model. He said Volvo's attempts over the past decade to broaden its rock-solid brand positioning on safety to also emphasize performance and sportiness has confused consumers. In the meantime, Mr. Austin said rival car companies, especially Honda, have made inroads into Volvo's core safety message.

Volvo Cars of North America said it sold 71,104 new vehicles in the U.S., Canada and Mexico in the first 10 months of 2008, a 28% drop from the same period a year ago. October was not kind to Volvo in the region; the brand sold 3,717 new vehicles in North America in October, a 52% decrease from October 2007.

Industry talk surfaced in the summer that Ford considered selling Volvo to Chinese automaker Chery or France's Renault. Ford denied the buzz, even as recently as October when Mr. Mulally said the automaker would continue to focus on both Volvo's and Mazda Motor Corp.'s business. On Nov. 18, Ford said it would sell a portion of its controlling 33.4% stake in Mazda to boost its balance sheet.
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