Ford Assembles Team to Sell Volvo by the End of 2009

The Detroit News is reporting that Ford has brought together an internal task force with the goal of selling its Swedish-based Volvo subsidiary by the end of year, citing unnamed persons “familiar with the situation.”

Codenamed “Project Nile,” the team has been in contact with multiple Chinese automakers, but the discussions are still in their early stages. Senior Ford executives want the deal complete by the end of 2009.

Charles Chesbrough, a senior economist at CSM Worldwide, a company which provides research and investing information concerning the automotive world, says it’s no surprise that a Chinese automaker would be interested in buying Volvo from Ford.

“It’s an opportunity to get into the luxury car market quickly,” he said. “This would immediately put them on the map.”

Although Volvo is an important asset to Ford, there are more important aspects of its business that need preserving – namely, the core Ford brand. Ford as a whole continues to hemorrhage cash every month – less than its American rivals, but far more than the Japanese and Germans – and Volvo sales are freefalling, off 64 percent in January.

Chesbrough says Volvo could help the Chinese counter their biggest perception issue: safety. “That’s probably been the Achilles’ Heel of Chinese vehicles,” he said. “Buying Volvo, which is known for safety, is one way to deal with that.” Volvo is known worldwide, above all else, for its class-leading safety features.

Chinese automakers Geely and Changan have been rumored as possible interested buyers of Volvo, although as recently as yesterday Geely executives have denied plans to buy it.

Source: The Detroit News