Speculations Increase on the Possible Selling of Volvo

By: Jason Moore

Ford part of the once renowned Detroit's Big Three and producer of top-of-the-line has released a statement refuting reports circulating in both UK and US that the automaker will dispose of its profitable Swedish unit, Volvo.

Sunday Times has reported yesterday that Ford has decided two weeks ago to sell Volvo for as much as US$8 billion. The Sunday Telegraph has also reported that Ford was willing to listen to offers from potential buyers of the automaker and would make a final decision on whether to proceed after completing the sale of its Land Rover and Jaguar businesses.

Ford said last month that it was conferring with investment bankers about options for Jaguar and Land Rover. The Dearborn, Michigan-based automaker is trying to restore a profit after recording a US$12.6 billion loss last year. The Sunday Times has reported last July 8 that Ford has set a deadline for bids to buy Jaguar and Land Rover.

Ford spokesman John Gardiner has declined to comment on reports in UK newspapers and refrain from saying whether there was a deadline for expressions of interest in Jaguar and Land Rover.

It can be remembered that Ford bought Volvo Cars from Volvo AV in 1999 for US$6.45 billion to become a part of the Premier Automotive Group of luxury-brand cars together with Jaguar, Land River, and Aston Martin. Ford sold its Aston Martin last March to a group of investors led by the UK auto-racing champion David Richards for US$848 million. However the sale was concluded only last May.

With the sale of the Aston Martin, rumors have started circulating of the possible sale of Volvo, Jaguar, and Land Rover brands.

Volvo's sales for this year is expected to surpass its 2004 record of 456,000 cars and sport-utility vehicles with the helped of new models and the increased in demand in Russia that is according to Fredrik Arp, the division's chief executive officer in an interview last June 26.

At present Volvo is focusing its efforts to expand other markets such as in Russia, China, and India in order to match the growth of its competitors such as Volkswagen's Audi luxury division and BMW's luxury cars.

Speaking of BMW, the Sunday Times has reported that the world's largest maker of luxury cars is interested in bidding for Volvo. Other automakers were also reported of showing interest on Volvo and these are Renault SA, Hyundai Motor Co and an unnamed Chinese manufacturer.

The Sunday Times has also stated that private-equity companies may also be attracted to buy Volvo. But of course all these would remain as mere speculations unless Ford will formally announced that it will sell Volvo.

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