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Is Volvo in Crisis?
Written by: Autocar staff   http://www.autocar.co.uk
05/08/2008 - 08:48 AM
Goteborg, Sweden
 
The lack of a large SUV is seen as one of the shortcomings of Volvo's lineup. (Volvo image) ยป More Photos

Ford has strenuously denied it is considering selling Volvo Cars, despite the Swedish carmaker running into financial trouble.

Volvo has posted a loss of $151m in the first quarter of 2008, compared with a $94m profit in the same quarter last year. Sources claim that Volvo could be poised to make significant job cuts to help to turn the financial situation around. Lewis Booth, chairman of Ford Europe, said, “Volvo is not for sale and we are about improving the business.”

Volvo is also under pressure from the strength of Swedish krona against the U.S. dollar, which makes it very difficult to profit from export sales to the U.S. Volvo sources told Autocar that sales of the new V70 wagon – the company’s bedrock model – have started to slide, despite the model being less than a year old. Swedish Volvo
dealers are said to have complained that the V70’s design was not distinctive enough and that the new model was not a significant step forward over the previous V70.

At a recent meeting of industrialists in Sweden, Volvo was also criticized by a brand specialist who questioned Volvo’s model strategy. The specialist suggested that a “family-oriented company” had made a mistake having three different sedan models in its lineup, and for investing in the compact, three-door C30 sports hatch. He also questioned Volvo’s lack of a large, stylish MPV.

Ford is also under public pressure form new investors. The Tracinda Group, an aggressive investment corporation led by Kirk Kerkorian, recently made a cash offer for 20 million Ford shares and a spokesman told the press that Ford should sell Volvo and the Mercury brand.
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