No Comment To Sale Of Volvo Cars Ford's Chinese Partner Changan

SHANGHAI December 10, 2008; Fang Yan writing for Reuters reported that Ford Motor said on Wednesday it was still evaluating an option to sell its Volvo car unit but declined to comment on a local media report which named its China partner Changan Automobile Group as a potential buyer.

The report did not provide details of the talks, but quoted a Changan executive as saying there was a chance for a deal.

"We will not comment on speculation or rumors, nor will we comment on regular business discussions that we have with our partners," Ford said in a statement.

The Chinese executive cited by the newspaper told Reuters that he was "misquoted" and he had no knowledge that Changan, one of China's six biggest auto groups, had ever held discussions with Ford on a Volvo deal.

"I told the National Business reporter that there is a chance that Changan might consider cross-border merger and acquisition eventually. It wasn't meant for the Volvo deal specifically," the executive said.

"Chinese automakers will become global players some day but we are not strong enough now to make major oversea acquisitions and turn around distressed assets," added the executive, who asked not to be named due to the sensitivity of the issue.

Ford and Mazda Motor Corp operate a car venture with Changan's listed arm, Chongqing Changan Automobile Co , which makes mid-sized Focus sedans, Volvo S40 among other brands.

Ford, which owns Volvo, and General Motors Corp, owner of Saab, are trying to sell some of their assets as they seek a multi-billion dollar government bailout.

Industry sources say U.S. auto companies have approached a range of Chinese companies about possible asset sales, but deals will be difficult to reach because of the risks involved as both the U.S. and Chinese auto markets slow sharply.

Chinese automakers' limited international exposure also makes the task of turning around distressed overseas car brands formidable, they said.

China's Dongfeng Motor Group Co is monitoring the situation at Detroit's troubled automakers, but a source with direct knowledge of the matter told Reuters last week that it was too early to say if it would be interested in buying any assets.

Chery, a Chinese automaker that secured a $1.45 billion loan from Import-Export Bank of China this week, will use the money to improve its product quality rather than buying U.S. auto assets, its chairman Yin Tongyao told the Shanghai Securities News on Monday.

Editing for Reuters by Jacqueline Wong