Ford and Volvo's Future Together

Pick your rumor. In today's chaotic climate, it seems there's some buzz on the Web about everything. Occasionally, the rumors turn out to be true, like the talks between General Motors and Chrysler. Indeed, the one thing that seems certain is that there'll be significant consolidation in the cash-strapped auto industry over the next few years.

So there was little surprise when Ford Motor Co. sold off the bulk of its stake in Mazda, the resurgent Japanese automaker, earlier this month, confirming ongoing reports that had started swirling in Japan weeks earlier. What remains to be seen is whether the ailing American automaker will also validate rumors concerning the fate of its equally troubled Swedish subsidiary, Volvo.

Since coming onboard at Ford, two years ago, CEO Alan Mulally has made it clear he'll consider every possibility when it comes to turning around the struggling American automaker. He's already sold off all the other overseas brands that, along with Volvo, made up the once-promising Premier Automotive Group. So, might Mulally abandon Ford's last foreign forays in a bid to raise some much-needed cash for the company's core North American brands?

For the moment, at least, company officials say that's not in the cards. But, then again, they don't entirely rule out such speculation.

Whether Ford might want to sell off Volvo "is a valid question," acknowledges Steve Odell, the Scandinavian maker's new CEO. But he quickly adds that, "No one [from Ford headquarters] said, 'Go get it ready for sale.' The bigger question is whether we're going to survive. I'd like the answer to be yes, and that has to be wrapped around product or it's just words."

To that effect, Odell insists his only mandate is to "get it fixed."

For their part, several senior BMW officials, asking not to be identified by name, said they were perplexed by the rumors linking the German company to Volvo. "It is not something we are seeking," asserted one.

Several well-placed industry analysts agree. Noting that such rumors first surfaced more than a year ago, Jim Hall, founder of 2953 Analytics, in Birmingham, Michigan, said that even if Volvo were for sale, he didn't see BMW as the likely buyer. For one thing, he notes that the German marque is in the midst of an internal reorganization that would make a major acquisition difficult to handle, at least right now. And Hall points to the devastating problems that followed its last major purchase, of the British Rover Group, which cost BMW billions and left it gun-shy about acquisitions.

Hall said he wouldn't be entirely surprised if Ford decided to sell its subsidiary because Mulally and his top lieutenants are "obsessed with polishing the Ford Blue Oval," but in the current global economic environment, he doesn't see any likely buyers waiting in the wings.