Ford Motor is considering the sale of its Swedish-based Volvo car division, a move that would mark the final dismemberment of its luxury car business outside North America.
The struggling Detroit-based carmaker said on Sunday it was not presently in talks with any other company about a Volvo sale. It added, however, that "we are continuing to assess all our operations and looking at strategic options".
Ford has already sold, or is in the process of entertaining bids, the other three marques of its luxury car division, known as the Premier Automotive Group (PAG). It disposed of Aston Martin earlier this year, and its financial advisers have set July 19th as a deadline for expressions of interest for Jaguar and Land Rover.
Analysts at Merrill Lynch have estimated that Volvo would fetch about $8 billion (€5.81 billion). Ford bought Volvo in 1999 as part of an aggressive expansion strategy, but sales have stagnated in recent years, including a 3.6 per cent drop in 2006 to around 430,000 vehicles.
Volvo is seeking to regain traction with a flurry of new models, helping to boost sales in the final quarter of last year and early 2007. It has recently sought to expand in China, Russia and other emerging economies. Ford lost $12.7 billion (€9.22 billion) last year and has borrowed heavily to shore up liquidity in anticipation of a further cash drain this year and in 2008.
PAG reported a $327 million (€237 million) pre-tax loss last year, but recovered to a $402 million (€292 million) profit in the first quarter. Ford does not break out results for individual marques, but Volvo is widely assumed to be profitable. Second-quarter results are due to be published on July 26th.
Ford officials ruled out a Volvo sale earlier this year, but have recently taken a more ambivalent approach.
Frederik Arp, Volvo's chief executive, recently declined to comment on industry speculation about a sale because "it's not in the interest of Volvo car stakeholders, customers, dealers or anybody else, and I don't own the business."
Ironically, even as Ford is retreating from the international luxury-car market, its domestic luxury brand Lincoln has shown signs of revival, with sales increases for the past nine months in a row.
One person familiar with the bidding process for Jaguar and Land Rover said that talks were still at an early stage. Ford would prefer to sell the two brands - which share many central management functions - together, but it has made preparations to sell them separately if necessary.
Goldman Sachs, Morgan Stanley and HSBC are advising Ford.