Ford mulls Volvo sale

Embattled auto company Ford announced on Monday that it is considering the sale of Volvo Cars.

Ford Motor Company said in a statement that the decision to review strategic options for Volvo Car Corporation came “in response to the significant decline in the global auto industry particularly in the past three months and the severe economic instability worldwide.”

Ford said the review probably would take several months to complete.

“Given the unprecedented external challenges facing Ford and the entire industry, it is prudent for Ford to evaluate options for Volvo as we implement our ONE Ford plan,” Ford president and chief executive Alan Mulally said in the statement.

The beleaguered Swedish carmaker Volvo said it was not surprised at news that the US auto giant was mulling selling it in the face of an industry-wide crisis.

“We understand they have to evaluate a number of different options. What will happen exactly, we don’t know,” Volvo Cars spokeswoman Maria Bohlin told AFP, adding that Ford had not informed the unit that it could soon be up for sale.

“There has been speculation about this for a long time but we don’t know. We have to wait and see what happens,” Bohlin said.

The Volvo group, which includes heavy truckmaker Volvo Trucks, sold Volvo Car to Ford in 1999. The US automaker is on the brink of collapse amid the global financial crisis.

The struggling Swedish unit, which has announced thousands of job cuts in recent months, posted a net loss of $458 million in the third quarter.

Volvo chairman of the board Finn Johnsson recently told Swedish financial daily Dagens Industri that his company was not interested in buying back Volvo Car and voiced opposition to calls for the Swedish state to acquire it.

“The state knows nothing about the car industry and Volvo needs an owner that can increase sales and cooperate with suppliers on components and development,” he said, suggesting French carmaker Renault as a good owner for the Swedish company.

Ford launched a major restructuring plan in 2006 to boost productivity and gradually transform its product portfolio to increase the share of compact and energy-efficient models.

Ford, which lost $129 million in the third quarter of this year, has along with General Motors and Chrysler pleaded with US lawmakers for a multibillion-dollar rescue for their crippled industry.

Executives of the “Big Three” US automakers are expected to return to Congress on Tuesday to argue their case.


Sweden’s Volvo regains strength after pandemic puts brakes on earnings

Swedish truck maker Volvo Group was hit by a sharp drop in earnings due to the coronavirus pandemic, but business rebounded at the end of the year.

Sweden's Volvo regains strength after pandemic puts brakes on earnings
Volvo Group CEO Martin Lundstedt. Photo: Adam Ihse/TT

In 2020, the group saw “dramatic fluctuations in demand” due to the Covid-19 pandemic, chief executive Martin Lundstedt said in a statement.

For 2021, Volvo raised its sales forecasts in its trucks division – its core business – in Europe, North America and Brazil.

However, it said it also expected “production disturbances and increased costs” due to a “strained” supply chain, noting a global shortage of semiconductors across industries.

The truck making sector is particularly sensitive to the global economic situation and is usually hard hit during crises.

In March, as the pandemic took hold around the world, Volvo suspended operations at most of its sites in 18 countries and halted production at Renault Trucks, which it owns, in Belgium and France.

Operations gradually resumed mid-year, but not enough to compensate for the drop in earnings.

With annual sales down 22 percent to 338 billion kronor (33.4 billion euros, $40 billion), the group posted a 46 percent plunge in net profit to 19.3 billion kronor (1.9 billion euros).

Operating margin fell from 11.5 to 8.1 percent.

However, the group did manage to cut costs by 20 percent.

“We have significantly improved our volume and cost flexibility, which were crucial factors behind our earnings resilience in 2020,” the group said.

Volvo's business regained strength in the second half of the year.

“Customer usage of trucks and machines increased when the Covid-19 restrictions were eased during the summer and this development continued during both the third and fourth quarters,” it said.

“Both the transport activity and the construction business are back at levels on par with the prior year in most markets.”

For the fourth quarter alone, the company reported a 38-percent rise in net profit from a year earlier.