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Ford Reaches Agreement to Buy Volvo's ]Passenger Vehicle Business

28 January 1999

Ford Reaches Agreement to Buy Volvo's Worldwide Passenger Vehicle Business

    DEARBORN, Mich., Jan. 28 -- Ford Motor Company has
reached an agreement with AB Volvo to buy its worldwide
passenger vehicle business, Volvo Cars, for a price of $6.45 billion.
    "Our 21st century vision is to become the world's leading consumer company
that provides automotive products and services," said Ford Chairman William
Clay Ford, Jr.  "The addition of Volvo is a meaningful step toward achieving
this vision."
    "Volvo is a premium automotive brand with unique appeal that represents a
good opportunity to profitably extend our lineup and grow the Ford business
worldwide," said Jacques Nasser, Ford president and chief executive officer.
"Volvo is a perfect complement to the Ford family of brands worldwide.  Volvo
has a world-class reputation for safety, quality, durability and environmental
responsibility -- all of which are attributes that are increasingly important
to our customers, and fit with our 21st century vision for Ford Motor
Company."
    "The proposed sale of Volvo Cars to Ford will have very important benefits
to the parties concerned," said Leif Johansson, president of AB Volvo and
chief executive officer of the Volvo Group.  "Volvo Cars' future prospects
will, by being an important part of one of the world's largest and most
profitable automotive groups, improve considerably."
    Nasser said that Ford is pleased to be able to expand its technology and
research capabilities through this transaction, as well as expand its
operations in Sweden.
    "Ford has been operating in Sweden since 1924, and today we sell passenger
and commercial vehicles through a network of 87 dealers there.  We have been
serving our Swedish customers for 75 years," Nasser said.  "We are not just in
Sweden, we are part of Sweden.  And, through our new relationship with Volvo,
we plan to be part of the fabric of the country for many years to come."
    Ford will take ownership of all of Volvo Cars' facilities worldwide,
including three major assembly plants and two powertrain plants in Europe and
Volvo's passenger vehicle product development center in Gothenburg, Sweden.
Ford will have the right to use the Volvo brand for passenger vehicles
including cars, minivans, sport utility vehicles and light trucks on a
perpetual basis.  Volvo has the right to use the Volvo brand for commercial
vehicles and its non-automotive-related products.
    "By adding Volvo as our seventh global automotive brand, we expect to
generate increased revenue and profitability while broadening the choices that
we at Ford provide our customers, and strengthening our image," Nasser said.
"Volvo Cars has a strong demographic and regional appeal that fits well with
other Ford products.  In addition, Volvo's fine global distribution network
will give us added flexibility to grow our other brands."
    This transaction is subject to regulatory and Volvo shareholder approval.
    "The agreed price represents full and fair value to the Volvo shareholders
and excellent long-term value to the Ford shareholders," said Ford.  "We
expect increased annual earnings through a combination of expanded product
lineup, volume growth, global economies of scale in engineering resources and
purchasing, and platform and manufacturing synergies."

    Ford Motor Company is the world's second largest automaker.  Its
automotive brands include Aston Martin, Ford, Jaguar, Lincoln, Mazda and
Mercury.  Its automotive-related services include Ford Credit, Quality Care,
Hertz and Visteon Automotive Systems.