December 16, 2008 / 8:47 PM / 11 years ago

UPDATE 1-Ford CEO expects lots of interest in Volvo

DEARBORN, Mich., Dec 16 (Reuters) - Ford Motor Co (F.N) is considering strategic options for its Swedish luxury Volvo brand “right now” and expects lots of interest in the brand, Chief Executive Alan Mulally said on Tuesday.

Volvo is in a position where it is a good time to consider alternatives, Mulally said, speaking on the sidelines of an event in Dearborn, Michigan, where the No. 2 U.S. automaker showed off some new vehicle models.

“I think that even though times are tough, there are a lot of people who would love to have that brand,” Mulally said. “Even though it is tough it’s going to work out okay.”

Volvo has been put up for sale by Ford, which along with its rivals General Motors Corp (GM.N) and Chrysler LLC is trying to survive a deep downturn in U.S. vehicle demand.

Mulally declined to comment on whether any companies have approached Ford regarding Volvo.

The No.2 U.S.-based automaker, which has been shedding assets as it scrambles to raise cash in recent years, has emerged as strongest of the three Detroit carmakers at a time when all three are seeking government aid.

Mulally said he fully supports an effort to address the near-term liquidity issues of GM and Chrysler.

A bailout of GM and Chrysler would bring “a lot of stability” to the battered industry, Mulally said, warning sales would “fall off really fast” if an automaker files for bankruptcy as the U.S. auto industry is highly interdependent on a network of parts suppliers and dealerships.

Mulally’s comments came as President George Bush said he was “considering all options” on automaker aid. GM and Chrysler are requesting $14 billion to continue operating through March. Ford is seeking a $9 billion line of credit.

Touching on industrywide U.S. auto sales for December, Mulally said sales so far this month were similar to the distressed levels of the past two months.

Mark Fields, who heads the company’s operations in the Americas, said that sales for the first half of December were at “about the same level” as in October and November.

U.S. industrywide auto sales have been hit earlier this year by the combination of high gasoline prices, a housing market slump and tighter credit.

But the market downturn accelerated dramatically in October and November in the wake of the financial turmoil that hit consumer confidence hard and made credit scarce. U.S. auto sales in November fell to an annual sales rate of around 10.2 million units, the lowest in 26 years.

In wide-ranging remarks, Mulally said Ford’s parts suppliers have not demanded tighter payment terms despite heightened uncertainty over the survival of Detroit’s automakers.

Analysts have raised concerns that parts suppliers, whose own balance sheets have been strained by tighter credit and declining auto production, could demand tighter payment policies out of concerns they may not get paid if their major customers are pressed to the brink of failure.

Suppliers are usually paid from 30 to 90 days after parts are received, rather than cash on delivery. (Additional reporting by Nick Carey; editing by Carol Bishopric)

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