Ford Still Weighing the Consequences of Selling Volvo

By: Rain Stockton

It was in autumn of 2005 when Bill Ford has announced the new era of innovation that will happen at Ford Motor citing engineers of Ford and Volvo working together to produce new and exciting safety features that will include night-enhanced vision technology and a collision avoidance system for vehicles.

Unfortunately things have not been going in accordance to the earlier announcement of Bill Ford and instead Ford Motors have found itself with mounting financial liabilities which have overshadowed Mr. Ford' s optimistic view of the automaker's future.

At present instead of the closer cooperation that Mr. Bill Ford has earlier announced, Alan Mulally, former Boeing executive and new CEO of Ford is mulling over the sale of Volvo which will surely strained the working relationship of the two companies. But Ford CEO Mulally has been denying reports that it will sell its Swedish-based unit subsidiary.

Tough Decisions
Ford has reiterated time and again that it's not yet in talks with any prospective buyers moreover sell its Swedish-based subsidiary but with all of its assets pledged to creditors it's not going to be surprising if one day it just decided to finally consider selling Volvo.

Volvo as compared to Land Rover and Jaguar, is by far the most profitable member of Ford's PAG. And if ever sold it will provide Ford with huge proceeds enough to pay off some of the debts of the automaker.

Rod Lache an analyst at Deutsche Bank has told his clients that Ford has two good reasons why it would need to dispose of Volvo. First, its sale would simplify Ford's operating structure as well as recovery strategy. And the most important thing, is that the sale of Volvo can provide extra cash needed by Ford to pay its healthcare liabilities as part of its upcoming talks with the United Auto Workers union.

Another analyst from Morgan Stanley, Jonathan Steinmetz has also added in a report he made stating that "Ford does not have the resources, from a financial or a managerial perspective, to keep ploughing time and money into all its brands."

The sale of Volvo would mark the final dismemberment of Ford's upmarket car business outside North America which formed the automaker's Premier Automotive Group (PAG) but of course will not affect other market segments especially the market of since its out Ford's hold.

Ford has earlier disposed Aston Martin and its financial advisers have set deadline for offers for both Jaguar and Land Rover but have not included Volvo yet. It must be because of the contributions of the Swedish automaker to Ford especially in the development of other products. But with the present financial condition that Ford is in its only a matter of time before the automaker finally let go of Volvo.

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