Ford Motor Co. (NYSE: F) is cutting production at its Volvo unit, according to The Wall Street Journal. The move, which could affect one-third of workers -- some 700 -- is seen as an attempt to cut the costs and losses at the upscale Swedish brand.
The question everyone is asking is whether this move is done in preparation for a sale. According to "people familiar with the matter" who discussed such things with the Journal, CEO Alan Mulally is interested in putting Volvo, whose sales have been declining, on the block. Of course, to analysts, Mulally sang a different tune last month, saying the priority is improve the Swedish auto maker operations "dramatically."
As Kirk Kerkorian's Tracinda Corp. continues to build its stake int he company, he may also have a thing or two to say on the matter.
For now, Volvo is cutting where it makes larger, less popular vehicles, and it plans to make fewer cars overall. But can this make Volvo more profitable for Ford, or at least more attractive to buyers? There are costs associated with producing a smaller number of vehicles, but with Volvo reporting 22,000 fewer vehicles sold during the first quarter, cutting production makes sense. Another matter Ford has to consider is the massive losses it suffered lately just from the kronor-dollar exchange rate.
It was nearly a year ago that speculation ran amok that German carmaker BMW could be interested in buying Volvo. Could it still be interested? Years back, Renault was interested too. With the credit crunch still crimping deals, and with some major players like private equity -- keeping in mind Chrysler's sale to Cerberus -- absent, it's likely such a sale could be postponed.
After selling its Land Rover and Jaguar units to India's Tata Motors Ltd. (NYSE: TTM) in a deal worth $2.3 billion, and Aston Martin for $848 million to investors led by David Richards, if Ford sells Volvo, it will be left only with Lincoln as its luxury line.
Facebook's IPO Debacle, Day 3: Un-Friended and Dis-Liked on Wall…
Former Olympic Rower Turned to Minimalism to Pay Down $82,000 in Debt


Reader Comments (Page 2 of 2)
5-21-2008 @ 11:31AM
robert said...
Dan - Nate - and Steven
Steven is correct here, I have spent my entire career supplying the auto business in the US. The car plants employ around 5000-7000 workers (not significant), but for each US car model produced there are at least 250,000 (99% non-union) jobs in every small town across the country producing the pieces and parts of that car. The majority of the parts on Asian cars are built in asia and shipped here, most of the small business's that used to supply all these parts are now gone and will never come back. So I hope all these small minded people choke on their Toyota's, Kia's, Honda's, and enjoy the great cheap imported products at Walmart while they still have money. PS europe has the same problems as us with competition. A country simply cannot survive without a manufacturing base, we will be another England in 10 years, and nothing can stop that now.
5-21-2008 @ 11:30AM
Greezer said...
Ford and other American companies have changed their ways and brought their quality standards up to equal Japanese cars and in some cases exceeded them. But a lot of Yupies who think they know much about cars... and who don't really have a clue are the biggest supporters of Jap Crap.. so wake up America before it's to late...oh, Mister Yupie... remember the almighty Toyota Camry..best selling car in America..well check your facts...it's being outsold by F150 Ford Trucks and Silverado Chevy Trucks.... so the best selling vehicle in America is still an American Truck.
5-21-2008 @ 11:51AM
Monty Python 1975 said...
Ford started out as Ford, Lincoln, Mercury; they should end that way instead of inbebting themselves and the stockholders by making wreckless business decisions. The other brands will still do well because they carry good reputations and a brand following. Jaguar, Volvo and Land Rover are first class vehicles, but who would by a Ford over them. Not me. Fix Or Repair Daily.
5-21-2008 @ 12:03PM
BC said...
Bought a new 122S in 1968, wouldn't start on cold mornings (a car made in Sweden!) bought a new 145 wagon in 1070, started falling apart in the first month, sold it in about 8 months. Now they have a car that seems to actually be good and good looking to boot, result "declining sales." Go figure.
5-21-2008 @ 12:46PM
glenn said...
In my opinion, Ford has made unreliable crap since the 1960's and maybe before that. Anything that Ford has had its hands on I would not touch for at least 10 years after it was sold
5-21-2008 @ 2:03PM
steven said...
i would rather buy a chrysler/ford/gm made in mexico or canada than a honda/toyota made in the usa.
i do like nissans however and nissan is owned by renault, a french company. so the question is, does nissan fall into the honda/toyota category or not?
5-21-2008 @ 1:10PM
tduck said...
....FORD makes some nice cars , but doesn't sell them in the U.S.
....U.S. auto companies will continue to slide , as long as , the U.A.W. with its nepotism and a hierarchy that cuddles its " squeaky wheels " buddies exist .
....wakeup workers , at a certain point in the union , the company is paying them .
....who do you think they care about ?
5-21-2008 @ 1:38PM
G. John Marmet said...
My wife and I owned Volvos from 1970 (a 1967 140) through 2006 (a 1996 960). We got rid of the last one and replaced it with a Chrysler 300C. When Volvo switched to front wheel drive in the late 90s, they lost our patronage. Perhaps a new owner will switch back to RWD and the fine autos of a decade ago will return.
5-21-2008 @ 1:40PM
Bob said...
Th answer is really simple . Make a Decent Product that will last and get the High Paid Union Losers off the payroll.
5-21-2008 @ 1:43PM
IXOYEforU2 said...
I have been admiring the XC-70's for for or five years. Last August when my daughter decided to move to L.A. I told her That I thought she should get a Volvo because they are a very safe car and dependable car. We went to the local Volvo dealer and while she picked our her new S-60 I asked if I could drive a beautiful XC-70 Cross country that caught my eye. The sales man said "OK" so away I went, amazed that I Thomas was actually driving a brand new Cross country. I drove it home and showed my wife who only said two words, "buy it". So that day last August
we bought two brand 2007 new Volvos. What a wonderful day.
I saw pictures of the 2008 Cross Countrys and decided on the 2007 as who ever designs Volvos absolutly ruined one of the most beautiful cars ever made.
We just got home Tuesday after driving to L.A. to visit our daughter who "Dad bragging" Is an Executive Assistant to a Senior Vice President at Warner Brothers. She is thrilled with her Volvo. Our very long drive, Colorado Springs to L.A. was really pleasent and comfortable in our Cross Country. I understand why in the last quarter only 22,000 Volvos were sold. In Burbank I was parked next to an 2008 Cross Country. The difference in looks was staggering and they get horrible gas mileage since they changed from the turbo 5 cylinder to the 6 cylinder.
Whether or not Ford sells They should fire the designers that ruined a beautiful car.
5-21-2008 @ 1:44PM
Mike said...
I'LL BUY IT. I THINK I HAVE A BUCK OR TWO AROUND HERE SOMEWHERE.
5-21-2008 @ 1:45PM
goodguy889 said...
Duh!!! Most of the cheap imports are made by the Koreans. If you think Japan was trying to bust our *#%)*^. Wait until the Chinese
enter our Market. They can make a Mercedes copy that is better in quality and features than the
germans. And They will cost Thousands less.
All the US automakers have fat cat management which have milk there companies to death. That money should have gone to R&D to build better units. Thank our government for giving all the advantages to the foreigners.
5-21-2008 @ 1:49PM
jchmoney said...
I have had both american, jap and swedish cars. I have had 2 nissan maximas and a honda hardly any problems at all. A chevy suburban not to bad, problems started at about 75000 miles. Pontiac montana van, utter crap. One Volvo, 150000 plus miles not many problems at all. I now have a Jeep one year old, one little problem, not bad. So overall I think the american car companies are finally starting to get the quality aspect right. The european versions of the fords cars are much better than the versions here. My family lives in england and their fords fit and finish is much better than ours. Also they have different models that they dont sell over here, which they should. Poor management decisions. The other problem we have is oil and gas. Bill Gates once said " if the american auto industry would have advanced like the technology industry we would be getting 100mpg right now. The auto industry needs to make more efficient cars so we are not paying these oil companies so much.
5-21-2008 @ 3:31PM
Tim said...
I've had many Fords. The low was in the mid 1970s to early 1980s. Ford makes some great products now (I have a 05 Mustang GT), I'd recommend any of them now, unlike the 90s when they made the so-so 3.8 V6.
When Ford was making a LOT of money in the 90s Jack Nasser went on a buying spree to a aquire Jag/Volvo/Land Rover/Aston Martin. But PAG (Premium Auto Group) was to the detriment of Lincoln/Mercury and the core Ford brand as model development lagged.
Volvo is a good brand. But they all look the same. Too much shared DNA? They revamped from the "Square" Volvo only to become staid again.
As for buying American, ask yourself "where do the profits go" when you buy an import? The long term implications are far reaching.
5-21-2008 @ 4:26PM
truthhurts said...
http://www.economagic.com/em-cgi/data.exe/bjap/ehdis01
Check out the link.
Japan trade reps testified to congress that they do not manipulate currency. The rate chart shows they do.
And in the long run, who pays for this lie?
All Americans do, that's who.
Wake up people, if they feel they can lie to us about money, why trust Japan on anything they say? And yes this lie is costing you the value of the dollar.
5-21-2008 @ 8:41PM
Adam said...
greezer is a fool
... remember the almighty Toyota Camry..best selling car in America..well check your facts...it's being outsold by F150 Ford Trucks and Silverado Chevy Trucks.... so the best selling vehicle in America is still an American Truck.
The Camry still is the best selling car in America, the keyword here is CAR...NOT TRUCK!
5-28-2008 @ 10:32PM
Diane Clark said...
Ford is moving to China. Cheaper labor, boys? I will never buy a Ford product and don't buy products or services from American traitors.
5-30-2008 @ 7:27PM
Tom Volvo said...
The Swedish hockey players on the Red Wings and other NHL are talking about it right now.