Report: Ford may seek Volvo sale

Ford CEO Alan Mulally

UPDATED: 05/20/08 9:12 CET

LONDON (Thomson Financial) -- Ford Motor is cutting production at its Volvo unit to reduce the costs and losses at the Swedish brand, the Wall Street Journal reported Wednesday.

The production cut, which could affect one-third of workers at one of its two Volvo plants in Europe, comes amid speculation that Ford is priming Volvo for a sale.

Ford has said publicly that it doesn't plan a sale, but CEO Alan Mulally has told top executives he wants to eventually seek a buyer for the Volvo brand, the newspaper said, citing people familiar with the matter.

Jerome B. York, who advises one of Ford's largest outside investors, Kirk Kerkorian, endorsed the idea of a sale earlier this month, saying he believed Volvo might be sold some time in the next 18 months, the newspaper reported.

Volvo announced on Monday it could lay off as many as 700 workers with a plant-shift reduction. The move was reported by the Web site for the local newspaper Göteborgs-Posten in an interview with Volvo CEO Fredrik Arp.

By dropping one of its three shifts at its Torslanda plant in western Sweden, Volvo is scaling back where it makes larger, less popular vehicles.

Volvo will also reduce the pace of production at the Swedish plant by close to one-third, to 44 cars an hour from 60 cars, at the end of June, Volvo spokesman Olle Axelson told the newspaper.

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