Ford to sell Volvo?

Over the weekend, rumors surface that Ford (NYSE: F) was mulling a sale of its Volvo brand. The Sunday Times reported that decision to sell Volvo was made in the past two weeks. The paper cited unnamed sources, and suggested that Volvo could fetch around $8 billion.

It's no secret that Ford is in pretty dire straits, struggling to return to profitability, and the company recently swung to a negative net worth. Given all of these pressures, a sale of Volvo to raise some cash might be tempting.

Happily, Ford has denied the rumors, and investors should rejoice if it isn't true. Ford's less upscale brands are facing intense pressure from lower-cost Asian producers, and luxury brands like Volvo may represent the only place where Ford has a durable competitive advantage.

Looking at Ford, there's not a lot to like: The company has major cash problems and many of its brands aren't what they once were. While a sale of Volvo would temporarily help the balance sheet, the brand may be the company's best hope for a strong future.

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