Ford Motor has written down the value of Volvo by $2.4 billion following a review of the Swedish brands prospects. Ford didnt say what it considers Volvo to be worth now.
The US carmaker said the move was not the first stage of a sale of Volvo, which made a pretax loss last year. Ford owns Volvo as part of its Premier Automotive Group.
Ford said it wrote down the value of the Volvo assets because it expects the brand to sell fewer cars than originally expected in coming years.
Ford also said that Volvo production will be reduced by 23,000 units to 112,000 in the first quarter of 2008 compared with a year earlier.
The announcement came following the release of Fords financial results for 2007.
Chief Financial Officer Don Leclair said: It is just simply a fact of the poorer than planned performance of Volvo reflecting the exchange rates and sales decline in the US and discounts. He also cited higher incentives in the US as a factor.
Ford reviews the goodwill of all its operations on an annual basis. But with the companys other PAG brands -- Jaguar and Land Rover -- expected to be sold soon, it had to calculate Volvos on a stand-alone basis.
Leclair said there were no plans to start building Volvos in North America to overcome exchange rate problems.
Ford of Europe Chairman Lewis Booth and Volvo CEO Fredrik Arp are conducting a review of the Volvo business with the aim of improving the brand and its profitability. The first results of the review are expected in March.
PAG made a pretax profit of $504 million last year, swinging from a $344 million loss in 2006.
Ford said cost reductions, volume growth and higher net pricing at Land Rover helped to offset unfavorable currency exchanges rates and an adverse model mix.
Full-year PAG revenues rose to $33.2 billion from $30 billion.
Although Volvo made a loss for the full year, a third consecutive year of record unit sales at Land Rover boosted PAGS performance.
The fourth quarter was tough for PAG, with profits shrinking to $59 million from $174 million a year earlier. The drop reflected adverse currency exchange rates and an unfavorable product mix at Volvo.
In the fourth quarter, the Swedish brand broke even, while the combined Jaguar and Land Rover operations were profitable.
PAG revenue for the quarter was $9 billion, up from $8.6 billion in 2006.
Ford also said today that Ford of Europe more than doubled its pretax profit last year to $997 million.
Improved sales volumes, a better mix of sales, and cost reductions helped the company improve its performance from a $455 million profit in 2006, Ford said in a statement.
Full-year revenues at Ford of Europe increased to $36.5 billion from $30.4 billion in 2006. Fourth-quarter profit was virtually unchanged at $223 million compared with $218 million a year ago, while revenue was $10.4 billion, up from $8.8 billion.