Struggling Ford Looks to Get a Lift -- From Slumping Volvo's New Models [Wall Street Journal]
Summary: Swedish automaker Volvo's (S80 model pictured) sales have been slumping of late, with its aging fleet of cars and higher global gas pump prices. Purchased by Ford in 1999, the nearly 80 year old luxury car maker has, until recently, been a staple of Ford's overseas luxury line, which also contains Jaguar, Land Rover and Aston Martin. In August, Ford surprised by announcing that it likely wouldn't see a profit from its luxury line this year - the result of high pump prices and a weakening dollar. Renowned for its unimpeachable safety design, Volvo is considered key to Ford's ability to again become a profitable company (the company reported losses of more than $5 billion in its most recent earnings report). And with seven new or improved models being released in the next four years, Volvo models just may be the key to a Ford recovery. If not, than Ford may ultimately have to consider unloading the company to the highest bidder. For the time being, however, that is not a concern. Volvo CEO Fredrik Arp claims Ford Chairman Bill Ford has assured him that Volvo isn't for sale because of its "global footprint." Volvo executives do acknowledge that they may be running out of wiggle room. According to Mikael Sallstrom, a representative of the Swedish Metalworkers Union and a Volvo board member, "When you have a situation like the one we have today, where [Ford] is bleeding money and Volvo's sales are down, your independence within the company isn't as big." Sallstrom, as well as many outsiders believe the only way for the Swedish car maker to ensure its future with Ford, as well as maintain its independence, is to increase global sales significantly - perhaps from 2005's 443,000 units sold to above 500,000.
Related links: Ford Q3 2006 Earnings Call Transcript • Investing Is... Using Stocks To Capture an Idea • Throwing In The Towel On Ford • Ford Expects to Slash 1H07 Production By 12% • Cramer's Take on Ford • GM, Toyota, Ford Post Oct. Sales Gains [AP] • Volvo Trucks Cutting 600 in Hagerstown [AP]
Potentially impacted stocks and ETFs: General Motors (NYSE:GM), Volkswagen AG (OTCQX:VLKAY), Toyota (NYSE:TM), Honda (NYSE:HMC), Mercedes [DaimlerChrysler] (DCX) • PowerShares Intl. Dividend Achiev. (NYSEARCA:PID),
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