Christine Buckley Industrial Editor
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Ford is preparing to put Volvo, the Swedish carmaker, on the sale block in a move that would leave the struggling American motor group with only its own-badge cars and Lincoln in the United States.
Volvo is part of Ford’s premier automotive group, a stable that includes Land Rover and Jaguar, which are both being sold. Their sale comes months after Ford disposed of Aston Martin as the American company struggled with record losses and plunging sales at home.
It had been thought that Volvo might be kept because it is profitable, but it is believed that Ford is now ready to receive offers. A Volvo sale would end Ford’s strategy of building up premium brands that began in the late 1980s.
According to a recent evaluation by Merril Lynch, Volvo could be worth $8 billion (£3.9 billion). It has been estimated that Land Rover and Jaguar, which are being sold together, could fetch about £1 billion. They are being sold as a pair because of the level of integration between them. Indicative bids are due in this Thursday.
Ford said that it was not in talks over the sale of Volvo, although all options for the business were being reviewed. It is understood that it is ready to dispose of Volvo and concentrate on recovery of its core Ford-badged business.
Analysts will be looking for any signs of recovery in Ford’s interim figures next week, the first results in which Alan Mulally, the chief executive, will have had a real chance to make a difference to the business’s fortunes. Mr Mulally was brought in by Bill Ford, the carmaker’s chairman, from Boeing last autumn after successive recovery attempts to arrest Ford’s decline had failed. Last year the company racked up record losses of $12.7 billion.
Volvo is a bigger business than Land Rover and Jaguar together. The British units employ about 16,000 while the Swedish company has 27,000 workers in Sweden and Belgium. It has some integration with the Ford business, but it is not as interconnected with its parent as Land Rover and Jaguar are with each other. The two British marques are entwined because they share production and research and development facilities.
Private equity groups are expected to be interested in Volvo, as they are in the sales of the British brands.
Unite, the UK’s biggest union, has urged the Government to intervene to prevent the takeover of Land Rover and Jaguar by private equity. It fears that buyout firms would not invest sufficiently in the companies and would fail to act for the long term, which, it says, is an essential strategy in the car industry, with its long product lead times.
Ford’s premier automotve group was largely the brainchild of Jacques Nasser, the former chief executive, who sought to diversify the car group from its traditional base. Mr Nasser was ousted by Mr Ford. He has sinced showed an interest in buying Jaguar but it is not certain whether One Equity, his private equity group, will table a formal bid. Mr Nasser held talks with Ford last August before the British brands were put up for sale.
Ford ended its own-badge carmaking in Britain six years ago when it closed the Dagenham assembly plant. However, it retained part of the Essex site to build engines, arguing that engine-making was better-suited to the UK than volume carmaking. With another factory at Bridgend, Glamorgan, Ford now makes one in four of all its car engines in Britain.
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Ford needs to sell Volvo. I work for a Volvo Dealership as a General Manager. Ford is a defunked car company and is run by overpaid managers that know nothing about the auto business. Also they could care less about there customers. Ford has run Volvo into the ground. I love Volvo. Go away Ford!
paul r smith, farmington, usa
Before Ford took over, Volvo was doing very well. It, together with Renault, had produced a new range of engines - many of which are now finding their way into new Fords, such as the Focus ST and the new Mark 3 Mondeo.
The range had been revised and the original S40 and V40 had already been launched, whilst the original S80, Mark 2 V70 and S60 were in the process of hitting the market.
These changes didn't come at the expense of the traditional Volvo values of safety, reliability and durability.
Volvo was healthy before Ford and it remains very healthy compared to many other motor manufacturers. Its in-house design has retained sufficient independence from Ford that even a spell in private equity would be unlikely to damage the company too much.
Paul McIntosh, Edinburgh,
Wait a minute. Has anyone forgotten what Volvos were like before Ford took over? Aerodynamic as a brick, and with one engine choice - a heavy cast iron I-4. Sure, they ran forever, but if you're getting 10mpg what you save in gas on newer models will pay for your next vehicle. Ford brought sexy back to Volvo.
And if BMW gets it's hands on Volvo, kiss safety goodbye. A Hyudai beat a BMW in an IHS safety test!!!!! The S80? Still at the top....
escapeowner, Towson, Maryland
Ford produced inferior entry level products and didn't stand behind them or take care of the customers.
The customers didn't come back to trade up. End of story.
Ford needs to apologize to the customers, recall the faulty products and correct the issues in future vehicles.
Anything short of this will result in failure.
Jim, Pittsburgh, PA
The Scripture Memory System for Windows
David McWilliams, harrisburg, pa
Volvos are good solid cars - I know I've owned two. Ford must be desperate.
Ian, Bristol,
Ford needs to quit bowing down to the Sodommites and Gomorrahites, and conduct them themselves in a manner that pleases GOD. When they start behaving better God won't make things as difficult for them, the more they obey his commandments, the better He will treat them.
Read Genesis 18, 19 & Leviticus 20:13 at a minimium on this topic, preferably the whole bible.
This will take you to Genesis chapter 18, start at 18:16.
http://www.biblegateway.com/passage/?book_id=1&chapter=18&version=9
This will take you to Leviticus chapter 20: http://www.biblegateway.com/passage/?book_id=3&chapter=20&version=9
David McWilliams, harris burg, pa
No, Ford owns a controlling minority share in Mazda, 33.4% or 40% if I recall correctly.
Harry, Charlotte, US
The article neglects to mention that Ford's continuing losses are due, in part, to an extended boycott by Christian groups in the US that are opposed to Ford's open support of gay groups.
Mike, Mason, Ohio
When I lived in the UK I drove Fords - a Ka, Fiesta and Focus. I was very happy with these cars and loved my ka. I moved to America and I test drove the Ford Fusion and Taurus. Both cars were terrible. I was expecting something similar to the Focus or Mondeo but I what I experienced was something from the early 80s - the taurus is a basic sierra. I ended up buying a volkswagen golf. Ford need to concentrate on producing good quality cars for the American consumer before they do anything else. That is their problem, not volvo, jaguar or land rover. Its a shame because even as a Brit living in America, the first place I went to when I needed to buy a car was the Ford dealership.
NEKP, New York, USA
"a move that would leave the struggling American motor group with only its own-badge cars and Lincoln in the United States."
They also have Mercury here in the US.
Brian, Bristol County, MA
Fords needs to come home and rebuild the confidence back into America. I am not going into how Ford service is, itâs not well as we all know. Ford must understand planed obsolescence is a thing of the past. Build an automobile that last and a service department where battery terminals are cleaned and place the caps on tight where they belong and all else will fall forward into place. Build a transmission and rear end that works and stop the Band-Aid approach. I am an American and drive a Ford. Prove us right Ford and do the right thing. PLEASE.
Regards,
RAH, Green Acres, Florida
Excess capacity in the sector leads one to believe that small players making expensive products are not likely to survive.
dwight tanner, vancouver, bc
Its history repeating itself year after year. The septics buy something mess with it then bail out when trouble at home
Matthew, Sacramento, CA
Ford also owns a majority stake in Mazda.
vince, pottsgrove,
Thank God! Volvos with the tainted influence of Ford-ized engineering has nearly ruined the appeal of the Volvos we've known and loved. Volvos are supposed to hug the road versus sway back and forth on S-turns like the "bubble-gummy" Ford kloodge-mobiles. May the next owner restore the integrity of this great auto maker.
Jaime Fienes, Overland Park, USA / Kansas