Mulally: Ford will keep Volvo unit for now
DETROIT -- Ford Motor Co. said today it won't sell its Volvo unit for now and instead will focus on improving the brand's financial performance.
"Our plan now is to not sell it and to focus on improving, especially, the cost structure and the position of the brand itself reflecting their new terrific lineup of cars and trucks," Ford President and Chief Executive Alan Mulally said during a conference call with Wall Street analysts and reporters to discuss Ford's third-quarter financial results.
Mulally said Ford will continue to review the brand periodically.
Ford also will disclose Volvo's financial performance starting next year. Volvo's earnings now are combined with results from Jaguar and Land Rover as part of Ford's Premier Automotive Group, but Ford is planning to sell Jaguar and Land Rover early next year.
Ford lost more than $12 billion in 2006 and has been struggling to cut costs and return to profitability. When it announced it was planning to sell its luxury Aston Martin brand in August 2006, it said the sale of Volvo was possible. In July, Mulally confirmed that Ford was conducting a strategic review of Volvo and likely would make a decision by the end of this year.
Mulally said that Ford wants to enhance Volvo's position as a premium brand. The company said it plans to work closely with Volvo in areas such as product development and purchasing.
"They are really moving to a more premium brand, improving cost structure. They're going to be fine, I think," Mulally said.
Ford's Premier Automotive Group reported a pre-tax loss of $97 million for the third quarter, a substantial improvement from last year's pre-tax loss of $508 million in the same period. Ford said Volvo lost money but it didn't break out the unit's results. Ford said PAG reduced costs and saw higher sales volumes, but those gains were offset by the weak U.S. dollar. Third quarter revenues for the brands were $7.4 billion, compared with $6.5 billion a year ago.
Ford acquired Volvo from Sweden's Volvo AB in 1999 for $6.45 billion. The company has relied heavily on Volvo as it tries to globalize its engineering, design and manufacturing systems. Ford's newly redesigned 2008 Taurus is built on a Volvo platform.
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