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Big Al thinkking of selling Volvo


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DEARBORN, Mich. -- Ford Motor Co., long considered the sickest of the Big Three U.S. auto makers, is showing signs of a surprise turnaround.

 

When Chief Executive Alan Mulally took over in 2006, Ford was barreling toward the worst one-year loss -- $12.6 billion -- in its 105-year history. A frail U.S. economy and high gasoline prices were ripping into sales.

 

But in the past year, Mr. Mulally, a former Boeing Co. executive with no auto experience, has improved year-on-year earnings each quarter. In 2007, Ford startled the industry by reporting $400 million in positive operating cash flow, something General Motors Corp. and Chrysler LLC have been hard-pressed to match.

 

At the same time, the quality ratings of Ford vehicles spiked (a trend that started before Mr. Mulally arrived) and now approach the lofty levels of Toyota Motor Corp. That chopped $1 billion off Ford's warranty costs last year.

The firm isn't done cost-cutting. According to people close to Mr. Mulally, he is looking at selling Volvo despite Ford's repeated statements that it intends to hang on to the brand. Similarly, he hopes to shutter the ailing Mercury brand.

 

WSJ

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Interesting stuff. I still think Ford junior did more for the business than anyone. He took some big, tough decisions that Mullaly has benefited from.

 

I think the sale of Volvo is inevable as is the closure of Mercury. I can't see Mullaly wanting to invest in Volvo and Mercury has become too insignificant. Ford will seem quite small when he's finished hacking it to pieces.

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'Shrink to Grow'

 

"This is a classic example of how one can shrink to grow," says Peter Nesvold, an analyst at Bear Stearns. Mr. Mulally "is making many difficult decisions during a down cycle, which should benefit the company as they enter the next upturn."

 

 

Ford's restructuring could still lose traction. Rising energy prices, Wall Street's debt-market woes and the nation's housing downturn are also hurting auto sales. Annual sales this year could hit their lowest level in more than a decade, according to J.D. Power & Associates.

 

And while Ford is doing well now with the Edge small SUV, Fusion sedan and Focus compact, car-buyers can be fickle. A few years ago, Chrysler had huge hits with the 300 sedan loaded with a powerful eight-cylinder engine, but its appeal has waned as gasoline prices zoomed past $3 a gallon.

 

Moreover, Ford still needs cooperation from the United Auto Workers union to replace older workers with lower-paid new hires.

 

Still, Mr. Mulally, 62 years old, has managed to improve the bottom line during the worst auto-sales downturn in more than a decade, while shifting Ford's vehicle mix away from fuel-thirsty trucks and SUVs. In 2004, Ford relied on large trucks and SUVs for 70% of sales; in March that number was 43%.

 

Can anyone doubt that Ford is going great guns improving their position in really tough times.

 

If survival means "Ford" has to be just Ford and Lincoln with no other brands, so be it.:)

Edited by jpd80
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If survival means "Ford" has to be just Ford and Lincoln with no other brands, so be it.:)

 

I agree, however, it will be a sad day when the doors close on Mercury. Volvo? Eh, I can do without them. Going forward, they will likely just be a distraction more than a benefit. Of course, with Volvo out of the way, perhaps that would free up a bit more room to keep Mercury around.

 

I have the suspicion that Mercury will be the very last to fall if they are indeed planning on dumping both brands. It has a lot of fabled American history that has got to be pretty hard to just walk away from. I guess this is why the big wigs make the big bucks. Decisions like these definitely aren't easy, as they will shape the future of the company forever.

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Can anyone doubt that Ford is going great guns improving their position in really tough times.

 

If survival means "Ford" has to be just Ford and Lincoln with no other brands, so be it. :)

 

Well said JDP, you can't keep bailing out the Jaguars of this world forever more like £1.2 billion that got pumped into them couple of years ago they are just going to drag the rest of Ford down faster, l am glad they are of the books Ford won't be getting any more nasty shocks from them in the future.

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I agree, however, it will be a sad day when the doors close on Mercury. Volvo? Eh, I can do without them. Going forward, they will likely just be a distraction more than a benefit.

 

Depends on where you see the world market growing in the next ten years. You can make a good argument that Volvo's potential growth in China, Russia, India and others will easily outpace Mercury's potential growth in the U.S.

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Sounds fine to me.... Ford, Lincoln and Mazda... (although Ford's Stake in Mazda could proabably be sold for a decent amount... probably more than the JLR brands) :hysterical:

 

I think the only possible buyer of Volvo would be a company like BMW. They have the capital and market growth to handle such a purchase. I'm just now sure how it would fit into thier overall business model...

Edited by FoMoCobra
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Mercury is insignificant because Ford hasn't done anything major with them in a long time. They wonder why people are walking away from Mercury? It's because there are no unique products, no more Cougar, and there has been no effort on Ford's part to invest in the brand. A couple unique products and suddenly things would be looking much better.

 

Ford will make a mistake if they walk away from Mercury just like GM did with Oldsmobile; Mercury customers will take their business elsewhere.

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Not sure about that one, Mercury's have pretty much been tarted up Ford vehicles with slightly better interior treatments. If Ford ups the ante from a product perspective I don't see any issues there.

 

Having said that, the only way to right Mercury is to infuse products that are a lot more different than their Ford stablemates, but if any brand deserves that first it would be Lincoln.

 

So when you're strapped for cash what do you do? Add a FoE product here and there to the lineup? Possibly do something with Mercury's lame logo? Re-aligning the brand as a VW type competitor?

Edited by Michael Reynolds
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'Shrink to Grow'

 

"This is a classic example of how one can shrink to grow," says Peter Nesvold, an analyst at Bear Stearns. Mr. Mulally "is making many difficult decisions during a down cycle, which should benefit the company as they enter the next upturn."

 

Wow...I mentioned this concept in a post in January and here is Ford??-LOL!s response.

 

Of course that Bear Stearns analyst couldn't know as much Ford??-LOL!.... :hysterical::hysterical:

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Who does more for Ford, Volvo or Mercury?

 

I perasoally would keep Volvo and ditch Lincoln and Mercury. Volvo is worth keeping, the other two are not.

 

Volvo hasn't done much of anything recently except lose money and market share in the US.

 

Why on earth would you ditch Lincoln over Volvo? I think Lincoln would have a much better chance of penetrating emerging markets than the smallish Volvo -- sort of like the Buick expansion model. Let's not even get started on comparing Lincoln's size in North America compared to Volvo.

 

Volvo just appears to be getting stodgy again. Their designs are becoming dated and they are really no longer bringing anything to the table. No increased sales. No major technology innovations that Ford couldn't now handle on its own. No reputation for anything but safety. Moving forward, it's unlikely that Ford will even continue using Volvo-engineered vehicle platforms. If the D3's survive into their next generation, they'll probably switch to some variant of EUCD. Heck, even Volvo is using Ford's platforms now.

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Depends on where you see the world market growing in the next ten years. You can make a good argument that Volvo's potential growth in China, Russia, India and others will easily outpace Mercury's potential growth in the U.S.

 

Could it outpace Mercury's growth in the US? Sure it could. Could it outpace Lincoln's growth worldwide (think Buick) if Ford had the money it currently spends on Volvo to sink into a global Lincoln instead? I doubt it.

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I think Mercury would be a good assignment for Jim Farley. Existing brand, existing dealer network, blank slate (some people don't even realize Mercury still exists)...I'd love to see what Farley could do with it.

 

I like Mercury! I would be saddened to see them go!

 

I like your Idea mustang84isu!

 

i think it would show that he not only the marketing guy!

 

didnt he come up with the Scion idea?

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Wow, for years we had so many brands, now it'll be just Ford and Lincoln...talk about falling from grace... So in other words, Lincoln is pretty much all I can choose from in the Ford brand? From what I'm seeing so far, there might not be hope for me :(

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