Markets

Ford Gives Up On Volvo, After All

By Jim Henry

Updated on: December 1, 2008 / 11:21 AM EST / MoneyWatch

Ford will give up Volvo Car Corp. after all, after a year of insisting it would keep Volvo and "fix" it.

Ford announced today it would "re-evaluate strategic options" for Volvo Car Corp., including possibly selling it.

That's the corporate-speak equivalent of offering a blindfold and a last cigarette, as I've noted here before, in connection with GM and Hummer, and Chrysler and the Viper model. I also wrote last month that Ford wouldn't sell Volvo unless it really had to. Looks like it really has to.

With Congressional hearings looming later this week, Ford must demonstrate it has left no stone unturned, in terms of cutting costs and getting rid of every possible frill. (Ford's Volvo Car Corp. should not be confused with Sweden's AB Volvo, the heavy truck maker, which is independent.)

Ford last month sold its controlling interest in Mazda, which it had held since 1996. That made Volvo even more conspicuous within Ford as the one remaining import brand in the Ford stable. Ford earlier sold off Aston Martin, Jaguar and Land Rover.

In its decision to cut Volvo loose (without using that term), Ford cited, "the significant decline in the global auto industry, particularly in the past three months, and the severe economic instability worldwide."

Volvo will carry on with cutbacks announced earlier, including cutting 4,800 jobs out of about 24,300 worldwide. Volvo is also dropping about 1,200 contract employees.

"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," said Ford President and CEO Alan Mulally.

"One Ford" is Mulally's shorthand for eliminating waste and duplication of effort caused by having separate Ford subsidiaries around the world, developing similar products independently, without taking full advantage of global economies of scale.

Ford said the latest "strategic review" for Volvo will likely will take several months --even though the brand has been under strategic review since November 2007.