Ford had talks with Renault to sell Volvo: sources

By Jui Chakravorty Das

NEW YORK (Reuters) - Ford Motor Co (F.N) has had exploratory talks with French automaker Renault SA (RENA.PA) to sell Volvo, but the talks ended quickly due to price differences, sources briefed on the matter told Reuters.

The two parties have spoken again after their initial discussions, which were held last autumn, the sources said.

Ford has also had talks with China's third-largest automaker, Dongfeng Motor Group (0489.HK), as a potential partner for Volvo, one of the sources said.

Ford spokesman Mark Truby declined to comment directly but said: "We announced earlier this year that Volvo is not for sale and that we are focused on improving Volvo's business results."

A senior Dongfeng executive said the matter had not been discussed by his company's senior management. But he said he could not rule out the possibility that informal initial talks may have taken place with Dongfeng's subsidiaries.

Even though Ford has said it has no plans to sell Volvo, the automaker has been having informal talks with interested parties, the sources said.

Analysts have said that Ford, which lost more than $15 billion in the past two years and has abandoned a long-standing goal of returning to profitability in 2009, could do with the extra cash.

The Dearborn, Michigan-based automaker is in the middle of a restructuring that includes closing 16 North American plants and slashing tens of thousands of jobs. It also mortgaged its assets in 2006 to secure about $23 billion in financing to help fund its turnaround.

The automaker has already sold Aston Martin, Jaguar and Land Rover, disbanding the Premier Automotive Group, whose only remaining brand is Volvo.

Volvo, a Swedish brand Ford bought for $6.45 billion in 1999, lost $151 million in the first quarter of this year.

Ford did not break out results for Volvo until this year, but has now begun doing that as part of a plan to help Volvo operate on "a more stand-alone basis."

Ford has said the unit lost money in 2007 and it wrote down the value of Volvo by $2.4 billion following a review of the brand's prospects in January.

DONGFENG, RENAULT

Dongfeng already has a joint venture with Nissan Motor Co (7201.T), in which Renault owns a 44 percent stake. The joint venture makes cars for the Chinese market. Separately, Dongfeng also has a joint venture in the works with Volvo AB (VOLVb.ST), which makes heavy trucks and operates independently of Ford.

The Chinese automaker has been making a push to expand its passenger car and light truck line-up. The Hubei-based company has its roots in building trucks and commercial buses.