Volvo CEO Rejects Discussion of Possible Sale of Brand

By: Rain Stockton

The head of Ford Motor Co.'s Volvo car unit refused to discuss if the brand could end up being sold as its parent company looks to refocus on its troubled North American business.

In an interview on the sidelines of an auto conference, the refusal by Volvo Car Corp. CEO Fredrik Arp follows news reports in Europe earlier this year that Ford briefly investigated the idea of selling the Swedish brand.

Ford announced earlier this month that it has retained financial advisors to be able to help it identify "the best way forward" for its Land Rover and Jaguar brands. These brands are part of the Ford Premier Automotive Group that lost almost $4.8 billion since 2004, despite several restructuring efforts.

Ford has attributed much of the declined sales to Jaguar but does not break out results from its individual European luxury brands. Swedish brand Volvo is also a portion of Premier Automotive Group.

Mr. Arp reasoned that he rejected the discussion and speculation because it is not in the interest of Volvo car stakeholders, customers, dealers or anybody else, and because he does not own the business. He explained at the Prague conference organized by the industry publication Automotive News Europe.

A Ford spokesman explained that the auto maker is not in discussions with any company with regard selling Volvo, which it bought in 1999 for almost $6.5 billion. Nonetheless, Mr. Arp continued that as they have consistently been saying since last year, Ford Motor Co. has been considering a number of strategic alternatives for all of their operations, just like any responsible doing of a business.

For $848 million, Ford sold Aston Martin brand in March. And until recently, the company had said that it was not interested in selling Land Rover and Jaguar. For $2.5 billion, Ford purchased the Jaguar passenger-car unit in 2000. But it has been forced to evaluate again its global business strategy as a result of big losses in North America, where high gasoline prices are dragging buyers away from Ford pickup trucks and sport-utility vehicles, while new entrants weaken the segments.

Last Tuesday, Mr. Arp said that Volvo's global vehicle sales climbed 8 percent during the first five months of the year, and that he expects that the brand will set a new record for unit sales this year. With quality , Volvo cars reached between 430,000 and 450,000 units of sales every year. Such sales figures are far fewer than competitors such as BMW AG and DaimlerChrysler's Mercedes unit - each of which sells more than a million vehicles every year.

As regards Volvo's financial performance over the years as compared with the other brands in Ford's premium group, the company officials have generally indicated greater satisfaction. Some industry analysts have speculated that Volvo would be easier to sell than Jaguar or Land Rover due to its initiatives in various safety features.

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