Ford Wont Sell Volvo - Fields

By: Glady Reign

Speaking at the manufacturing launch of the 2008 Ford Taurus last week at the Chicago Assembly Plant, top Ford Motor Co. executives suggested Volvo Cars, which the automaker purchased in 1999 for about $6.5 billion, has become too integral to Ford's ongoing engineering and marketing strategy to be carved out of the company for cash.

"Volvo is pretty integrated into Ford right now," said Mark Fields, Ford's president of the Americas. Fields, who is heading up Ford's crucial North American turnaround plan, previously led Ford's Premier Automotive Group (PAG), which oversees the brands Jaguar, Land Rover and Volvo.

After selling the ultra-luxury Aston Martin brand for $848 million in May, the Dearborn automaker is now exploring selling other pieces of PAG to raise more money to support Way Forward - its turnaround plan. The plan aims to close 16 plants, slash 44,000 jobs and revamp the company's Ford, Lincoln and Mercury lineups in hopes of restoring the company to profitability in 2009.

Ford CEO Alan Mulally said that a review of the place Jaguar and Land Rover will play in Ford's portfolio and future will be completed soon. Analysts added those brands, whose dealer and manufacturing operations are entwined, could fetch as much as $8 billion in a sale, according to Citigroup. "Any good business continually reviews its portfolio," Mulally said.

But Fields said that Ford has worked diligently to merge Volvo's operations with Ford's over the past five or so years, especially as the Dearborn automaker tries to remake its image as a safety leader. Most of that integration has been apparent in Ford's European lineup so far, but now the North American division is beginning to enjoy the fruits of the relationship.

Volvo, for one, was instrumental in helping the new Ford Taurus safer, developing crush zones that transfer energy around the passenger compartment in a crash to protect car occupants. Volvo has etched a reputation for safety and dependability. and other auto equipment are famed for the Swedish automaker's safety expertise. This expertise is now being shared to the Ford lineup.

Ford Taurus has now earned a "Top Safety Pick" from the Insurance Institute for Highway Safety (IIHS). To qualify, a vehicle must earn the highest rating in front, side and rear impact tests and also be equipped with standard electronic stability control.

Fields, who was the architect of the PAG turnaround that has yet to see Jaguar become profitable, did not want to discuss his personal feelings on the possible divestiture of the brand. "At the end of the day, you have to do what is right for the business," he said.

Fredrik Arp, the CEO of Volvo, declined to comment on the company's future as its parent Ford weighs options on divesting some of its units. "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 I don't own the business," said Arp, at the Prague conference organized by the industry publication Automotive News Europe. "I'm here to run Volvo and not to talk about that."

Arp said that Volvo's global vehicle sales rose eight percent during the first five months of 2007, and that he expects the brand to set a new record for unit sales this year. 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.

Earlier this month, Ford said that it has retained financial advisors to scout purchasers of its British brands - Land Rover and Jaguar.

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