Ford moves closer to selling Volvo

STOCKHOLM (AP) — Ford Motor Co. said it is moving closer to selling its Swedish Volvo brand, even though the U.S. automaker is in far better financial shape than it was when it put the brand up for sale last year.

The Dearborn, Mich., automaker said Wednesday that it expects to finalize the sale of Volvo to China’s Geely Group early next year if financing and government approvals fall into place.

Ford did not reveal the amount of Geely’s offer. Auto analyst Matts Carlson estimated the price tag for Volvo at between $2 billion and $2.3 billion.

Ford officially put Volvo on the market in December 2008, at the close of a year in which Ford was in desperate need of cash. Last year, the company lost $14.6 billion, the worst performance in its 106-year history. At the time, Ford had mortgaged its factories to borrow $23.5 billion, and CEO Alan Mulally joined his counterparts from Chrysler and General Motors in requesting U.S. government aid.

It turned out the company, unlike GM and Chrysler, didn’t need the government aid, and it has managed to repay $10 billion in debt, reducing its total to $27 billion. Ford posted a $1 billion third-quarter profit, it stopped spending more cash than it took in, and it predicted a return to sustained profits in 2011. Ford’s U.S. sales through November are down 19 percent from the same period last year, but that’s a smaller drop than the overall market’s 24 percent decline.

Ford decided to sell Volvo in order to focus its management resources on the Ford, Lincoln and Mercury brands, and that continues to be its mission, company spokesman Mark Truby said Wednesday. Ford acquired Volvo in 1999 for $6.45 billion.

“This was never really about Volvo — which we recognize is a very strong brand — but more about the direction we’ve decided to take with Ford,” Truby said.

If the sale goes through, it would be another step in the U.S. auto industry’s sell-off of acquisitions made when it was flush with cash from truck and sport-utility-vehicle sales in the 1980s and ’90s.

Ford sold its Jaguar and Land Rover brands to India’s Tata Motors Ltd. in June 2008 for $1.7 billion, a third of what it paid for them. General Motors Co. is selling its rugged Hummer brand to construction machinery maker Sichuan Tengzhong Heavy Industrial Machinery Corp., and China’s Beijing Automotive Industry Holdings has agreed to buy some powertrain technology from GM’s Swedish Saab unit, which is being closed down unless a buyer is found by the year’s end.

Work remains on financing and government approvals for the Volvo deal, Ford said in a statement, adding it expects to sign the pact in the first quarter of 2010 and close it in the second quarter.