Why It Doesn’t Make Sense for Ford to Keep Volvo

Volvo, the famous Swedish carmaker with a reputation for boxy designs, capacious wagons, and unimpeachable safety, has been part of Ford's (F) Premium Automotive Group since the late 1990s. As with General Motors (MTLQQ) and Saab (bankrupt, and also for sale), Ford’s goal was to bring unique aspects of the Volvo brand into its international corporate family. And as with GM, it didn’t really work.

Now Ford CEO Alan Mulally is pushing a “One Ford” philosophy that’s attempting to bring the company back into the simplified scope of the Blue Oval. The business will still be international, but the brand will be Ford and Ford alone. Jaguar and Land Rover were already sold (to India’s Tata Motors in 2008), as was Aston Martin (to a consortium of investors in 2007). Volvo is all that’s left of the PAG, and it doesn’t support Mulally’s goals.

Ford doesn’t need Volvo and the challenge of managing a carmaker with deep, deep roots in another country. It also needs the $2 billion it hopes to get from the sale, possibly to upstart Chinese automaker Geely. And in a sense, it has kind of recreated the classic Volvo 240 wagon in its successful new crossover/wagon, the neoclassical Ford Flex.

Volvo’s role at Ford was to provide some affordable luxury, a notch below BMW and Lexus, plus that legendary Volvo rep for safety. People who allegedly would never look at a Mercury or Lincoln (Ford’s more upscale brands) would go for a Volvo. People who like Volvos also tend to buy one Volvo after another, and Ford was hoping to tap into some of the brand loyalty. Arguably, Ford doesn’t need that any more. In fact, the company would probably be better off reviving the brand strength of Lincoln and Mercury, imbuing them with some of Volvo’s luster and making them competitors for whomever buys the Swedish stalwart.