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Booth and Ford: Volvo is not for sale

Lewis Booth
LONDON -- Volvo had a tough first quarter but it is not for sale, a top Ford executive said here today.

“We’re focused on improving the business,” Volvo Chairman Lewis Booth told a small group of reporters here on Friday.

Booth’s remark comes less than a day after Jerry York, a top representative of billionaire investor Kirk Kerkorian, told Automotive News that he thinks Ford will sell Volvo. In April Kerkorian’s Tracinda Corp. bought 100 million shares, or 4.7 percent, of Ford and is offering to buy another 20 million shares.

Speaking hypothetically, York said if it were his call, Ford would unload the Volvo and Mercury brands. He met with Ford CEO Alan Mulally after Kerkorian began making the investment.

“I’m very confident that (Mulally’s plan) is the answer, and I think you’ll see that he’ll put Volvo on the market within the next year and a half,” York said in the interview. “There’s no rational reason for keeping Volvo or Mercury.”

York said Mulally did not tell him any of his plans.

Booth, who also is executive vice president of Ford of Europe, said Volvo’s product program is in good shape, but the company has been hampered by rising raw material costs and the strength of the euro and Swedish krona against the dollar.

In the first quarter, Ford said Volvo posted a pretax loss of $151 million, compared with a profit of $94 million during the same quarter last year. Volvo posted first-quarter revenue of $4.2 billion, down from $4.6 billion a year ago.

Volvo’s first-quarter sales in Europe were down 9.7 percent to 66,912 vehicles compared with the same period last year. Volvo’s U.S. sales declined 7.9 percent to 24,804 vehicles in the first quarter.

Booth said he thinks Volvo’s volume will improve thanks to new models such as the XC60 SUV.

“We’re very encouraged by the reception so far,” Booth said.

A dealer in Germany told Automotive News Europe that demand has been so high for the vehicle that he has had to tell people they will not get it until 2009.

Booth also said that Volvo must become more upscale.

“We have to get Volvo out if this in-between land,” he said. “We need to build on our attributes of safety and environmental performance.”

Ford, meanwhile, released a statement reaffirming that Volvo is not for sale.

“We are focused on improving Volvo's business results as our first priority,” Ford spokesman Mark Truby said.

“We also have been investing and continue to invest in new Mercury products, including the new Milan and upgraded Mariner that debut later this year.”

Ford, however, continues to evaluate its business portfolio “as we would always do,” Truby added.

Amy Wilson, Jamie LaReau and Philip Nussel contributed to this story

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