Ever since Ford Motor Co. started selling off the members of its once Premium Auto Group, more eyes have been turned to its Swedish-holding Volvo.
"What will Ford do with it?" pundits asked, and many believed it, too, was on the auction block.
Thus, we guess some people were surprised when Ford decided not to sell the company. In fact, it has been announced that Volvo will operate more independent of the parent.
It makes sense. Volvo is valuable to Ford. It gives the company an upscale presence that is not as luxurious as BMW, Mercedes, and Jaguar, and closer to the mainstream. And auto pundits are saying that is good. In addition, Volvo offers a lot of technological innovation for Ford, particularly in the field of safety.
One of the biggest issues the American automaker will have to face, though, is the currency fluctuations. For example, the Volvo XC60 is being manufactured in Belgium. Volvo assembles cars only in Belgium and Sweden. Right now the Swedish currency, the krona, has been rising in value in comparison with the U.S. dollar. This has cost it and Ford more than $1 billion in profits. The company set a record in sales last year reaching 458,000 but it still lost money.
Our take? Lately Volvo has been experimenting with its style, with the hot hatch C30 as a result. While the reviews have been positive, its parent company’s troubles may ultimately limit Volvo no matter how independent it is from Ford.
via New York Times