As part of the deal, Geely will reportedly invest up to $10 billion in building the Volvo brand and the first model to be fully designed under the guidance of the Chinese automaker will be the next-generation XC90 due in 2011.

The project’s key lightening techniques include the use of steel where appropriate, but also lightweight materials such as aluminum and magnesium where cost-effective. Its overall goal is cutting body-in-white structure weight in the mid-size segment by up to 30% while maintaining commercially reasonable prices.

Volkswagen’s implementation of the project evolved out of three individual concepts, reports Autocar. The first was made entirely of steel, the second with mixed materials built to low cost goals and the third was built from more expensive mixed materials. All reduced weight from the current vehicle by at least 20%, while the expensive concept reduced weight by 41%.

The new lightweight body shell ultimately settled on use of a combination of all three concepts to achieve the best balance of weight and cost.

The end date of the SuperlightCar project is set for July 31, 2009, so expect to see more fruit from the lightweight tree as the other carmakers involved in the project begin rolling out their implementations. Volkswagen’s lightweight Golf is expected to hit the market, along with its SuperlightCar siblings, from 2012 and beyond.

Visit www.AudiForum.ca for more details

Ford purchased Volvo back in 1999 for $6.4 billion. Although Ford has announced an official price for its Swedish Volvo brand, several reports have indicated the Dearborn-based automaker will be seeking at least $6 billion. No time frame for sale has been set by Ford.

That was worse than Wall Street was expecting, but the company insisted that it has sufficient liquidity to weather the current economic crisis and does not need government aid.

“We faced nearly unprecedented challenges in our global markets,” CEO Alan Mulally told reporters and analysts during a conference call this morning. “The severe economic challenges had a significant impact on our fourth-quarter results.”

Ford’s full-year after-tax loss from continuing operations was just over $7.1 billion, translating into a loss of $3.13 per share. Its fourth quarter after-tax loss from continuing operations, excluding special items, was $3.3 billion, or $1.37 per share, compared with a loss of $487 million, or 23 cents per share, a year ago. Analysts had been expecting a loss of $1.30 per share, according to a survey by Thomson Reuters.

More troubling was the fact that Ford burned through $5.5 billion in cash during the last three months of 2008. That was better than the $7.7 billion the company burned through in the third quarter, but more than analysts were hoping for.

Still, Ford’s automotive operations finished the year with $24 billion in available liquidity, including $13.4 billion in gross cash.
Ford to draw down revolver

The Dearborn automaker also said it would draw down its $10.1 billion credit revolver, but Chief Financial Officer Lewis Booth told reporters that it did not intend to use that money to fund operations, nor was it required to maintain minimum cash levels. Rather, he said Ford decided to put that money on its own books now because of the “uncertainty” in the financial markets.

Ford lost about $800 million in available credit when Lehman Bros. collapsed last year.

Ford stressed that it expects to significantly reduce its cash burn rate this year, despite a dismal economic outlook. It will save billions compared to last year by deferring payments to a union-run trust for retiree healthcare and operating cost reductions announced last fall.

It also will cut 1,200 jobs at Ford Credit to further reduce operating costs in its consumer lending arm and announced that it had reached an agreement with the United Auto Workers to end to the controversial jobs bank program, which continues to pay idled factory workers.

Ford is alone among U.S. automakers in not asking the federal government for financial aid, though it warned that it too could ask Washington for loans if car and truck sales continue to deteriorate.

Ford’s sales plunged 20.5 percent last year, surpassing the industry slide of 18 percent. They were down nearly 32.3 percent in December, better than the industry drop in December of 35.6 percent, according to Autodata Corp. Ford expects results to be down sharply into this year.

Because Ford has not asked the federal government for money, it is not bound by the same restrictions imposed on rivals General Motors Corp. and Chrysler LLC by the White House in December, both of which are mandated to seek significant concessions from bondholders, suppliers and the UAW.

Ford hopes to negotiate some of the same deals.

Ford is in the midst of its latest round of white-collar layoffs, which aims to cut Ford’s U.S. salaried payroll by another 10 percent.

The automaker has eliminated more than 13,000 salaried positions and more than 43,500 hourly jobs in North America since the end of 2005.

“In response to these challenges, we took decisive actions,” Mulally said.
North America did better than expected

There was some reason for hope in Ford’s financial results, analysts said.

Its fourth quarter pre-tax loss for North American automotive operations was $1.9 billion, just $400 million more than the company reported for the same period in 2007.

Analysts had been expecting a much sharper decline, given Ford’s dramatic drop in U.S. sales. Fourth quarter revenue was $11.3 billion, down from $17.3 billion a year ago. That means Ford realized significant gains from its North American cost-cutting efforts during the quarter.

“Profits were largely in line — better North America on costs, weaker internationally,” said analyst Himanshu Patel of JPMorgan. “Operating cash burn that was a bit worse, but overall cash burn was a touch better … Overall, expect neutral reaction.”

Mulally said Ford has reduced its operating costs in North America by more than $5 billion, putting it ahead of the goals set in its turnaround plan. But he acknowledged that these improvements continue to be undermined by the harsh realities of the marketplace.

The global economic crisis took a heavy toll on all of Ford’s international divisions.

The company still managed a $105 million profit for the quarter in South America, compared with $418 million a year ago, but Ford of Europe swung to a loss of $330 million from a profit of $223 million in the last three months of 2007. Its operations in the Asia-Pacific and African regions lost $208 million, compared with a profit of $10 million a year ago.

Its Swedish brand, Volvo, reported a loss of $736 million. It broke even in the fourth quarter of 2007. Ford is continuing its “strategic review” of Volvo with an eye to selling it in the near future to raise additional cash.

Ford Credit reported a pre-tax loss of $372 million in the fourth quarter, up from $263 million a year ago. Ford blamed the increase on higher provisions for credit losses and lower volumes. Repossessions were also up.

Ford’s lending arm posted a net loss of $1.5 billion for 2008, a decrease of $2.3 billion from net income of $775 million a year earlier.
Outlook remains ‘challenging’

Ford said 2009 would be a “challenging” year for it and the entire automotive industry.

Booth said the company now expects U.S. vehicle sales to be as low as 11.5 million units this year, cutting the company’s forecast by up to a million units from just a few weeks ago. But Ford also predicted that its share of the U.S. market will end its decades-long decline this year after posting three consecutive months of market share increases for the first time in 12 years.

Mulally said early indications are that January will also see a modest share gain. He also said Ford’s cash burn rate will be “significantly less” in 2009.

That is due to cost-cutting efforts, deferred payments to the UAW retiree health care trust. The company is also banking on significant loans from the U.S. Department of Energy and European Investment Bank to help fund the development of new, more fuel-efficient cars and trucks.

Ford is not cutting back on its aggressive product plans.

“Our pipeline is full,” Mulally said. “Ford has sufficient liquidity to make it through this global downturn and to maintain our current product plans without the need for government bridge loans.”

But he said Ford still has the opportunity to seek federal aid if necessary. Mulally said that might be necessary if a “major competitor” filed for bankruptcy, an obvious reference to rival General Motors Corp.

“Despite the present turbulence in the worldwide economy, I continue to believe that Ford is well-positioned to take advantage of our scale and global product strengths,” he said. “We can effectively operate through the current downturn.”

Check out www.CMOC.ca for more Ford related chat

Volvo reinstated 3 years/36,000 miles free maintenance for 2009 models after a major push from dealers, who said consumers needed more confidence in the brand. Volkswagen began a similar program for 2009 models to allay concerns about quality and repair costs.

Volvo had eliminated the program for 2006 models, part of a trend among prestige brands. Mercedes-Benz killed free maintenance for 2005 models, and Audi axed its program for 2007 models. BMW kept its program.

Although it took most of the year to convince Volvo of the program’s merits, David Karp, president of Karp Volvo in Rockville, N.Y., says the advantages are obvious: “I expect more customers. They will bring the car in more often, and it will be better maintained — which means less problems and improved value.”

Mark Fields, who owns four Volvo stores in Illinois and Wisconsin, also is a BMW dealer. He says a big part of BMW’s success in the United States has been free maintenance.

“The Volvo buyer is a practical buyer who studies the buying decisions and does a lot of research,” Fields says. “The cost of owning the vehicle is now less.”

Fields says he’s still trying to sell 2008 models, which makes it hard to gauge how many customers are coming in because of the free maintenance.

“At my four stores, we’ve seen a little pickup in business even with the snow,” he says. “The new program will take some time and communication.”

Philip Reed, consumer editor for Edmunds, says free maintenance is more important for a foreign brand than a domestic. “It gets a number of buyers that may be on the fence,” he says.

“People are very afraid of repair costs, particularly in a foreign brand. People may perceive that it may be more expensive than for a Ford or a Chevy.”

According to Edmunds, Audi, Jaguar, Lexus, Mercedes-Benz and Scion don’t charge for the first scheduled maintenance. Only BMW, Land Rover, Mini, Saab and Volvo extend that service. Most programs are for 3 years/36,000 miles. BMW has the longest terms with 4 years/50,000 miles.

What this will bring to the Volvo nameplate, noone knows. Naturally it will seem like it’s cheapening the brand if it gets sold to the Chinese. According to major publications, investor Kirk Kerkorian, would like to see Ford rid itself of Volvo, which it purchased in 1999.

It is said that CEO Mulally has began to consider selling Volvo about a year ago. Several companies have been contacted regarding the offer including BMW and Mazda.

Volvo instead of meeting their targets of selling 200,000 vehicles by 2010, are said to be closer to approaching 90,000 vehicles. Head office is in the midst of asking unprofitable dealers to leave the franchise, thereby cutting about 20% of it’s dealerships in the U.S.

Ford said to cut about 2,000 jobs across the board from the operations of Volvo in midst of it ending it’s quarter with a $151 million loss.