Update: SAIC not in talks with Ford over Volvo sale

Updated: China’s Shanghai Automotive Industry Corp. (SAIC) has denied claims it was in negotiations with Ford over a possible sale of Volvo, with an inside source revealing there were no talks between the two carmakers altogether. The speculation first arose when a Swedish newspaper reported that Ford was seeking a buyer for Volvo and was in talks with several Russian and Chinese companies. Ford has also denied any possibility of a sale, revealing that its current interest is in improving Volvo's business results.

Original: As part of an extensive cost reduction program, Volvo will cut its global workforce by 2,000 jobs with 1,400 white collar positions set to go and the remaining 600 jobs cuts made up of blue collar workers. Most of the job cuts, 1,200, in total will take place at Volvo’s headquarters in Gothenburg, Sweden, while 300 job reductions are planned abroad.

Negative currency effects, mainly due to the weak U.S. dollar, and increasing raw material prices have deteriorated Volvo’s financial situation, and with the outlook remaining bleak and a first quarter loss of $151 million still hurting the latest job cuts had to come.

The job cuts are part of an overall cost reduction program that’s targeting an overall $700 million cut in spending that has been in effect since the start of the year. Volvo’s strategy to return to profitability is to retain leadership in safety technology, develop more environmentally-friendly vehicles and to focus on emerging markets such as Russia, China and Eastern Europe.

Volvo currently employs 25,000 people worldwide and produces roughly 450,000 cars per year. There’s speculation that the drastic measures are part of a greater plan to improve Volvo’s image in the eyes of investors ahead of a possible sale, which Ford execs have frequently hinted at.

An inside source has revealed to Automotive News that Russian and Chinese investors, including carmaker Shanghai Auto, are interested in acquiring Volvo but Ford has since denied the comments. A number of other car companies have also been connected with a purchase of Volvo over the past year, including BMW and Mazda.