Ford Motor Co. has decided not to sell Volvo after all.
Alan Mulally, Ford chief executive officer, told reporters and analysts Thursday that Volvo is no longer for sale. Instead Ford now plans to concentrate on repairing the Swedish company's cost base.
"The plan right now is to fix it," added Mulally, who also hinted future plans for Volvo will include moving it further upscale into the areas Ford is vacating with the proposed sale of Land Rover and Jaguar. The first priority of the plan is to improve financial performance at Volvo, Mulally said.
However, the overall plan for Volvo also includes enhancing Volvo's position as a global producer of premium vehicles and establishing new business arrangements between Volvo and Ford-brand operations so Volvo can operate on a stand-alone basis once the Premier Automotive Group is dismantled.
Ford also plans to disclose Volvo's financial performance beginning with 2008 results, added Mulally, who said the decision followed a strategic review of Volvo operations and its value to Ford.
The sale of Land Rover and Jaguar will continue. The company continues to explore in greater detail the potential sale of Jaguar and Land Rover with interested parties and anticipates these discussions will culminate in an agreement no later than early next year, Ford said as it also released its third-quarter financial results.
Overall, Ford reported a net loss of 19 cents per share, or $380 million, for the third quarter of 2007 and its North American automotive business remained in a deep funk with a pre-tax loss of $1 billion.
Mulally, however, said he was satisfied the company had made and was making satisfactory progress and still expected the company to become profitable again in 2009.
Ford's loss in the third quarter was significantly smaller than the net loss of $2.79 per share, or $5.2 billion, Ford posted in the third quarter of 2006. Ford's third-quarter revenue was $41.1 billion, up from $37.1 billion a year ago. The increase primarily reflected higher net pricing, changes in currency exchange rates, and improved product mix.
Ford also reduced its spending on rebates and other consumer incentives by $500 million in the third quarter, according to chief financial officer Don Leclair.
Ford's third-quarter loss from continuing operations, excluding special items, was 1 cent per share, or $24 million, compared with a loss of 45 cents per share, or $850 million, in the same period a year ago. The company's cash balances are now above year-end 2006 levels, despite the ongoing restructuring.
"Our third quarter performance is very encouraging," Mulally said. "We can see our plan taking hold with significant improvement continuing in our core automotive operations," he said.
Ford's vehicle quality also is continuing to improve and is now getting attention. The company's new products are also attracting new retail buyers, he said. Ford's sales have dropped 13 percent this year but Mulally said the company's market share has stabilized.
Mulally also said the company was expediting the introduction of smaller, more fuel-efficient products consumers are demanding.
The new tentative agreement with the United Auto Workers, which must be ratified by employees, also will provide the company with a significant lift, Mulally said.
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