Ford considers sale of Volvo

By Soyoung Kim

DETROIT (Reuters) - Ford Motor (F.N) said on Monday it was reviewing options for Volvo and could sell the luxury Swedish car brand as it scrambles to shore up cash amid a deep industry downturn.

The announcement came a day before Ford and the other two Detroit automakers face a deadline to submit stepped-up restructuring plans to Congress in a bid to win support for a $25 billion (16.8 billion pound) rescue package.

Ford, which has been shedding assets as it strives to raise cash in recent years, said the review of Volvo was part of its efforts to "strengthen its balance sheet" at a time when auto sales are plunging worldwide.

Shares of Ford jumped as much as 12 percent in morning trade, but gave up the gains to trade 23 percent lower as of 2:26 pm ET, tracking slides in a broader market and as concerns set in that the loss-making automaker would be a tough sell.

"Asset sales in the current environment are very challenging," said David Allon, a portfolio manager at Firstrust Financial Resources in Philadelphia.

"They have to look at all options but if there's going to be a buyer, it's going to be at a fire sale price," Allon said.

Volvo posted a pretax loss of $458 million in the third quarter versus a loss of $167 million a year ago as sales declined 24 percent.

Ford burnt through $7.7 billion of cash in the third quarter and said last month it would make deeper cost cuts and explore asset sales in a bid to free up $17 billion in liquidity through 2010.