Morgan Stanley’s head of automotive research believes it is no surprise that Ford’s Alan Mulally is trimming output at its Volvo Cars unit.
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Adam Jonas told delegates at Automotive News Europe’s Congress in Turin that Volvo is being hit by adverse currency movements and that any prospective buyer would likely face a long haul in making it profitable again.
“It’s not a surprise that Volvo production is being cut,” he said.
“A kroner- and euro-based cost base alongside dollar revenues…well, it doesn’t get much worse than that and we believe that Volvo Cars is loss-making.
“Ford has made its intentions very clear: Volvo is not a part of the Ford core. The question is, who would be a buyer? Whoever it is ought to have a very long time horizon, be prepared to invest a lot of money and absorb losses for the next three to five years if currencies stay where they are.
“But that Volvo brand definitely has value and there’s a scarcity of brands that have that sort of value in the market. They’ll find a home somewhere.”
Dave Leggett
