Jun25
Ford will sell Volvo to the Chinese, Volvo says it will cut 2,000 jobs
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 and has a revamped model line-up. Analysts believe Ford is holding out for a good market price.
Volvo says it will cut 2,000 jobs
Volvo Cars, owned by the struggling Ford Motor, said today it would cut 2,000 jobs across its operations in an effort to trim costs.
Volvo said it planned to cut its work force by 1,400 white-collar staff and 600 blue-collar workers to offset the impact of a weak auto market and surging raw material costs.
The company has long been struggling with negative currency swings, mainly due to a weaker dollar, as well as steep rises in steel prices, but recently the situation had worsened, it said.
"Previously, this had been balanced with the help of cost reduction and efficiency programs," it said in a statement.
"However, with a continued declining U.S. market, continued price increases on raw materials, and weaker market conditions in Europe, the situation has deteriorated."
Ford in November took Volvo, which reported a first-quarter pretax loss of $151 million, off the auction block and said it planned to integrate its subsidiary more closely into purchasing and development efforts and that it would focus on improving Volvo's cost structure.
Volvo said the staff cuts announced today were part of a scheme to cut costs by 4 billion Swedish crowns ($662 million).
Most of the job cuts announced today would be carried out in Sweden with 1,200 employees given notice at its operations in Gothenburg on the country's west coast.
Thompson Financial contributed to report
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This story posted by LeaseTrader.com, the automotive service company that lets people transfer out of their Car Leases early. If you're looking to swap a lease or transfer out of your car lease, please visit www.leasetrader.com