Ford Motor Co. is now considering selling its Volvo car unit, reversing an early position that the Sweden-based luxury division was not for sale, a person familiar with the matter said.

The shift comes as Ford's fortunes in the key North American market continue to sour. Its market share in the U.S. have fallen faster than the company had expected, increasing the pressure on the company's already-battered bottom line. The auto maker lost $12.6 billion in 2006.

Late last year the company mortgaged most of its plants and other assets in a bid to raise cash. It also sold its Aston Martin luxury nameplate and has begun considering a sale of its Jaguar and Land Rover brands as well.

Although Volvo is likely to attract the interest of a number of potential buyers, Ford had until now maintained it was not willing to sell the unit.

So far Ford has made no decisions on the matter, and a company spokesman said Sunday that Ford is not discussing the idea with any would-be buyers. A person familiar said the company's deliberations on Volvo were still at an early stage. But internally, another person at the auto maker said, the idea of selling the brand is now seen as having a 50-50 chance of happening.

The fact that the company is considering such a move is the latest sign that the auto maker is considering scaling back its luxury-car strategy under new CEO Alan Mulally.

"Ford is not in discussions with any companies in relation to selling Volvo," a company spokesman said Sunday. "As we've been saying since last year, we continue to assess all of our operations and are looking at our strategic options."

A Volvo spokesman in Sweden referred questions about Volvo's future ownership status to company spokesmen at Ford headquarters in Dearborn, Mich.

In recent months, Ford had publicly ruled out a sale of the Swedish brand. In March, Volvo Car Corp. chief executive Fredrik Arp told a reporter at the Geneva auto show that Mr. Mulally is "very supportive of developing the brand and developing the products going forward." In June, however, Mr. Arp declined to comment on the idea of a sale when asked about it in front of an audience of auto-industry executives attending a conference in June.

A person familiar with the matter said that contact between Ford executives in Dearborn and Volvo executives has grown noticeably less frequent in recent weeks, which some see as a sign that the brand's future status is uncertain.

In June, Ford said it had retained financial advisors to help it identify "the best way forward" for its Land Rover and Jaguar brands, which are part of the Ford Premier Automotive Group that lost nearly $4.8 billion since 2004, despite numerous restructuring efforts.

Ford doesn't break out results from its individual European luxury brands, but has attributed much of the red ink to Jaguar. Swedish brand Volvo is also part of Premier Automotive Group.

"The reason I reject going into this speculation and discussion is that it's not in the interest of Volvo car stakeholders, customers, dealers or anybody else, and [because] I don't own the business," Mr. Arp said in June at the auto-industry conference.

Ford sold Aston Martin for $848 million. Until recently, the company had said it wasn't interested in selling Land Rover and Jaguar. Ford acquired the Jaguar passenger-car unit for $2.5 billion in 1989 and the Land Rover SUV unit for $2.75 billion in 2000, but has been forced to reassess its global business strategy as a result of big losses in North America, where high gasoline prices are pulling buyers away from Ford pickup trucks and sport-utility vehicles, while new entrants dilute the segments.

How much money Volvo could fetch for Ford is unclear. Merrill Lynch estimated earlier this year that the combined sale of Jaguar and Land Rover would raise between $1.3 billion to $1.5 billion, while a sale of Volvo would raise about $8 billion. Volvo sells between 430,000 and 450,000 cars a year, far fewer than rivals such as BMW AG and DaimlerChrysler AG's Mercedes unit, each of which sell more than a million vehicles a year.

Ford denies it's in talks to sell Volvo By DAVID RUNK, Associated Press Writer
8 minutes ago

DETROIT - Ford Motor Co., responding to reports that it's putting its Volvo unit up for sale, said it is not negotiating with anyone to sell the Swedish automaker.


The Sunday Times, citing unnamed sources in London, said the decision to sell Volvo, which is part of Ford's Premier Automotive Group, was made in the past 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 Web site, said Ford would entertain offers for Volvo following a board meeting last week. The newspaper cited people whom it didn't name who it said had knowledge of the situation.

Ford spokesman Tom Hoyt said in an interview with The Associated Press on Sunday that the company wasn't commenting on speculation about Volvo's future. But later in the day, he issued a denial that the automaker was in talks to sell the unit.

"To my knowledge, we are not in negotiations with anyone about the future of Volvo," Hoyt said.

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.

Auto analyst David Cole said if Ford's cash flow problems were desperate enough, selling Volvo might make some sense.

"You could get cash out of it, which is very important right now," said Cole, chairman of the Center for Automotive Research in Ann Arbor.

Ford in December finalized a $23.4 billion financing package to fuel its restructuring and cover expected losses in its automotive operations. It pledged domestic plants and other automotive assets as collateral.

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 from Sweden's Volvo AB 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 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 developing tastes for 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. The Premier Automotive Group reported a record pretax profit of $402 million for the quarter, due largely to Volvo.

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

Cole questioned why Ford would want to spin off Volvo, particularly because of how much Volvo is part of Ford's design and production operations. He noted Ford's reborn Taurus debuting for the 2008 model year is being built on a Volvo platform.

Should Ford decide to sell Volvo, it would need to ensure that the cooperation continues, Cole said.

"Volvo is really an integral part of Ford," Cole said.
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AP Auto Writer Tom Krisher and Associated Press Writer David N. Goodman in Detroit contributed to this report.

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