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Ford may sell Volvo to get back in the black

The automaker is reportedly considering parting with the luxury brand as it struggles to return to profitability.

July 16, 2007|From the Associated Press

DEARBORN, MICH. — Ford Motor Co. reportedly is preparing to sell its moneymaking Volvo luxury brand as it works to return its North American operations to profitability.

"We've said all along that we're viewing our options and assessing our business," said Ford spokesman Tom Hoyt. But he said in an interview with the Associated Press on Sunday that the company wasn't commenting on newspaper speculation about Volvo's future.

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

The New York Times, in a story posted Sunday on its website, said Ford decided to entertain offers for Volvo after a board meeting last week. The newspaper cited people who had knowledge of the situation whom it didn't name.

Hoyt confirmed that Ford's board met last week but said he knew of no decision.

When Ford last August 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.

No bank had been appointed to handle the Volvo transaction, both newspapers said. The Sunday Times said the deal could be worth $8 billion.

Ford acquired Volvo in 1999 for $6.45 billion.

Last month, Ford said it was reviewing its position on Premier Automotive Group brands Jaguar and Land Rover, fueling speculation that the company was getting closer to selling the brands.

Ford sold Aston Martin for $848 million in March, with some analysts saying the brand did not fit into Ford's long-term survival plan. That plan includes cost savings by developing multiple models worldwide on the same underpinnings.

The possible sale of Volvo comes as the company is struggling to return to profitability in the face of fierce competition from Asian automakers and a shift in consumer preferences toward more fuel-efficient models in its key North American market.

It is slashing thousands of jobs and plans to close plants to cut costs.

Dearborn, Mich.-based Ford posted a narrower loss of $282 million for the first quarter. Premier Automotive Group reported a record pretax profit of $402 million for the quarter, largely because of Volvo.

Ford has been relying on Volvo, an analyst has said, as it tries to globalize its engineering, design and manufacturing systems.

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