Ford talks with SAIC to sell Volvo ?

Ford Motor is in negotiations with a Chinese company to sell its Volvo cars division, the Swedish business publication Dagens Industri reported today on its Web site.

A Russian investor is also believed to be interested in acquiring the division, the report said.

Media reports have suggested that the Chinese company involved in talks is Shanghai Automotive Industry Corp.

A Ford spokesman said: "We have been consistently saying since the end of last year that Volvo is not for sale. We are focused on improving Volvo's business results."

Ford's new major shareholder Kirk Kerkorian, with a 6.49 percent holding, has stated he would like to see the cash strapped U.S. automotive giant divest itself of Volvo which it acquired for 50 billion Swedish crowns in 1999.

Ford's CEO Alan Mulally began a strategic review around a year ago with the sale of Volvo thought to be among his goals. However the company has denied this.

A number of automotive companies have been connected with a purchase of Volvo over the last year, including Germany's BMW and Japan's Mazda.

The Volvo brand has shown good growth over the last few years in Europe, and has a revamped model line-up.

However, in the U.S. market, Volvo has skidded under exchange rate pressures, triggering several years of sales declines. Rather than reaching for a hoped-for goal of 200,000 North American sales by 2010, Volvo is instead trying to stop a slide below 90,000 units.

In response, Volvo calling on many unprofitable U.S. dealers to walk away from the franchise, an effort expected to cut about 20 percent of the dealerships by the end of the year.

[Source : Automotive News (Subscription required)]