Slow news day,huh? Ford selling Volvo

By Lou Ann Hammond

I remember when John F Kennedy Jr. was being followed by the media/papparazzi one day. He looked at them with his wry grin and said, “Slow news day, huh?”

With everything else to report on in the auto business, the rumors that Ford is going to sell Volvo continues. The rumors started this time with an article in a Swedish magazine, written about the same time as a Financial Times article saying that 8 percent, or 2,000 of the 25,000 employee, jobs would be cut from the European side of Volvo.

A good part of what makes Volvo Volvo is that they have stayed true to their Swedish heritage. Their cars are made with safety in mind, and an eye to the future for fuel technology.

Volvo doesn’t make their cars in the United States, and the fallen dollar has increased the cost of importing cars. Therein lies the reason for the layoffs – America’s subprime problems have hurt the dollar, the dollar has hurt the bottom line of Volvo.

Alan Mulally, CEO Ford Motor Co., has said more than once that Ford has no intention of selling. In fact, I spoke with three people that report to, and for, Mulally and they all said the same thing. Of course, Ford would not be willing to say anything even if they were talking to someone, but they have denied voraciously that they are looking for a suitor for Volvo.

Some of the people inside Ford and Volvo were surprised when the Automotive News story came out saying that Ford Motor is in negotiations with a Chinese company to sell it’s Volvo cars division.

Ford’s new, 6.49% shareholder, Kirk Kerkorian, has also stated that he would like to see Ford sell Volvo.

The Volvo people weren’t surprised that Ford would be talking to the Chinese or Russians if Ford was going to sell, they were just surprised that Dagens Industri, via Automotive News, reported that Ford was selling, since Mulally has said more than once that Volvo is a strategic part of Ford.

On the John Batchelor show (listen below) Doug Speck said that the Chinese company that was listed as “in talks” with Ford, says they haven’t spoken with Ford about buying Volvo.

The Financial Times had it right when they reported that Volvo is more entrenched in Ford than Jaguar and Landrover were, so it was easier to sell them. Ford doesn’t like to admit it, but Volvo was the group that created rollover stability control for their SUVs.

Speck agreed with Batchelor and myself that it would be beneficial if Volvo produced cars in the United States like BMW, Subaru, etc.

Volvo is also entrenched in Ford. When I spoke with Volvo’s President & CEO, Frederick Arp, back in Nov., 2007 he said Volvo has the broadest offering of flex-fuel vehicles in Europe, eleven countries in all. Volvo already has diesel in Europe, so does Ford. Arp says diesel from Volvo could show up in the United States around 2010 to 2011.

Arp was at the 2007 Los Angeles auto show to show off a plug-in electric hybrid that could be in the market around 2015. Volvo considers the motor development of a plug-in hybrid as essential as a lithium-ion battery.

The plug-in hybrid that Volvo is working on normally gets 60 miles per gallon, but with the battery onboard the “recharge” can get 100 mpg. The recharge can be recharged in three hours by a standard outlet in your garage.

More importantly, and the kind of thinking that makes Volvo Volvo, is a smart plug that could provide a service to the grid by being a voltage regulator, which makes the grid more efficient. Volvo is working with Pacific Northwest National labs, a division of the Department of Energy (DOE) that is working to Increase U.S. Energy Capacity and Reduce Dependence on Imported Oil.

Listen to Lou Ann Hammond and Doug Speck on the John Batchelor radio show:

About the Author:

Lou Ann Hammond is the CEO of Carlist and Driving the Nation. She is the co-host of Real Wheels Washington Post carchat every Friday morning and is the Automotive, energy correspondent for The John Batchelor Show and a Contributor to Automotive Electronics magazine headquartered in Korea. Hammond is a member of the North American Car and Truck of the Year (NACTOY), Women's World Car of the Year (WWCOTY), and the Concept Car of the Year.