Volvo Loses $1.5 Billion in 2008; $736 Million Fourth Quarter
January 29, 2009
DEARBORN, Mich. -- Ford's Swedish brand, Volvo, posted a $1.5 billion loss in 2008, with
$736 million of that loss coming in the fourth quarter.
That compares with a loss of $164 million in 2007 and breaking even in the fourth quarter of 2007.
Ford CEO Alan Mulally, in a conference call, blamed Volvo's significant loss largely on lower sales and exchange rates. He said Volvo remains under strategic review, which includes its possible sale, but said no further details would be provided at this time.
Ford CFO Lewis Booth said in the conference call with media and analysts Thursday morning that Volvo's sales dropped 47,000 units in the fourth quarter alone to 80,000 vehicles. Volvo's fourth-quarter revenue fell to $3.3 billion, a $1.8-billion decrease from the year-ago quarter.
In addition to overall declining sales, lower transaction prices due to higher incentives, not only in the U.S. but also in Europe, particularly in the U.K. and Russia, further hurt revenues as did currency exchanges. In the U.S., Volvo had lower residual values, an important factor in leasing, adding to its lower revenue,
Volvo restructured in 2008, eliminating 6,000 jobs by the end of the year or 25 percent of the workforce, Booth said.
Volvo's global sales in 2008 totaled 458,323, 14 percent more than its first year of Ford ownership. In the U.S., Volvo sales fell to about 73,000 vehicles, well off the 2004 peak of 140,000 and 40,000 less than 1999.
Though Ford gave no more detail about Volvo, media reports quoting company sources say Volvo goes on the auction block in February and Chinese auto companies are expected to be among the bidders. Analysts say Volvo's global network of dealers and development capability could be attractive to suitors, especially those from China looking to expand globally.
Ford bought Volvo for $6.4 billion in 1999 and had been part of the now-defunct Premier Automotive Group of luxury brands collected when Jac Nasser was Ford CEO. It's not clear how much Ford could get for Volvo; it sold Jaguar and Land Rover to India's Tata last year for $2.3 billion -- before the bottom fell out of the market.
Posted by Michelle Krebs at 6:11 AM under Business , Ford | Comments (0) | digg this | Seed Newsvine
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