Struggling automotive manufacturer Ford said today it could sell its luxury Swedish arm Volvo as part of a strategic review of the business. The announcement came as the fragile state of the global car industry was underlined by plummeting sales figures for November.
Ford and its fellow US carmakers, General Motors and Chrysler will submit business plans to the US Congress on Tuesday in a bid to win backing for a $25bn (£16.78bn)emergency aid package.
Ford's initiative came amid a further raft of bad news for the ailing global automotive industry as the combination of economic gloom and a dearth of consumer credit continue to hammer sales. Latest figures show sharp falls in car sales in Belgium, Italy, Sweden and France in November. Worst hit was Spain, where sales fell by almost half - the worst performance since 1993 - and where the Madrid government is already budgeting for an €800m package to help the automotive industry amid fears it could shed 50,000 jobs. In Japan car sales fell 18% and were down 8.6% in South Korea.
In the UK, where sales have fallen by more than 20% in September and October, and where the November sales figures are due to be released later this week, Aston Martin said it was seeking cutbacks because of falling demand. The carmaker said it could cut staff numbers by 300 and reduce the number of temporary workers by a similar amount because of the current downturn.
The company, which has already said it is extending the Christmas holiday shut down by two weeks, employs 1,850, mainly in the West Midlands.
Aston Martin chief executive, Ulrich Bez said: "Like other premium car brands, Aston Martin has been forced to take action to respond to the unprecedented downturn in the global economy. These are regrettable but necessary measures in the extraordinary market conditions we all now face."
The poor sales figures in continental Europe will make grim reading for the UK car makers as the bulk of the cars made in the UK are exported and a number of plants are taking extended Christmas breaks.
"The financial crisis and the weaker economy is now hitting the auto market full force," said one European automotive industry executive on Monday.
Ford's decision to launch another strategic review at Volvo - just 12 months after the last one - looks to be aimed at helping to win Congressional approval for the emergency aid. The big three US carmakers were warned by Democrat leaders last month that a bail-out would not be forthcoming unless they came up with credible restructuring plans.
Ford said the review at Volvo "is in line with a broad range of actions Ford is taking to strengthen its balance sheet and ensure it has the resources to implement its product-led transformation plan."
Volvo, which was part of Ford's stable of upmarket marques under the Premier Automotive Group, has been looking increasingly isolated since the sale of other PAG brands; first Aston Martin and then Jaguar and Land Rover. Its sale would also help to reassure congress that any funds would not be used to support overseas subsidiaries.
Other Ford asset sales include an agreement to sell part of its stake in Japanese car maker, Mazda.
The US carmakers are not the only ones seeking aid from governments. Volvo and Saab, which is owned by GM, are reported to have approached the Swedish government for financial help.
The European commission has pledged to help the car industry as part of a €200bn economic stimulus package and in the UK the pre-budget report included measures aimed at helping to boost sales though the industry would like to see carmakers' finance arms get access to the funding being provided to the UK banks.
