Stephen Odell, a British national, will be the first non-Swede to run Volvo.
updated 9/2/2008 4:37:14 PM ET 2008-09-02T20:37:14

Ford Motor Co. Tuesday named a veteran executive to head its Volvo Cars operation in a sign that the automaker is likely to keep the Swedish automaker and fix its problems rather than sell it.

Ford named Stephen Odell Odell as Volvo's president and chief executive officer, effective Oct. 1. He replaces Fredrik Arp, 54, who led the company for three years but has decided to leave, Ford said in a statement.

Goteborg-based Volvo Cars, which Ford bought in 1999, has been struggling against a weak U.S. dollar, rising raw material prices and declining demand.

Odell, 53, a Briton, is the first non-Swede to run Volvo. He was chief operating officer of Ford of Europe and had served as its vice president of marketing and sales. He also held senior level positions at Mazda Motor Corp., of which Ford owns a large share.

Cash-strapped Ford was seeking buyers for Volvo last year, but the Dearborn automaker said in November that Volvo was no longer for sale. Instead, Ford said it would try to fix the brand and change its image to attract more upscale luxury buyers.

Odell's appointment is a sign that Ford will stick with Volvo and continue to integrate the Swedish brand into Ford's operations, said Erich Merkle, an auto analyst with Crowe Chizek and Co.

Ford likely will try to give Volvo parts that are common to Ford's new global line of vehicles, in areas that customers won't notice, Merkle said. Such commonality will help Volvo cut its costs, Merkle said.

"They've got to get those cost savings so they can be more profitable with Volvo and with their overall Ford product lineup," he said.

Matts Carlsson, automative analyst at Goteborg Management Institute, said the change signals that Ford wants to take Volvo in a new direction. Ford recently criticized Volvo for failing to build more environmentally friendly cars, he said.

"This is a statement from Ford that they want to shift into a higher gear," he said. "They want to increase the pace of Volvo's integration into Ford and the new profile that Volvo is seeking."

Carlsson said Ford may want to reconsider the plan to move Volvo upscale to compete with established luxury automakers.

"It's been discussed that they should no longer view BMW and Mercedes as their competitors, but work downward toward the profile as a people's car that Volvo once had," he said.

Under Odell, Ford plans to make Volvo more efficient and roll out new products, Ford spokesman Mark Truby said.

"He has a very strong background in marketing and sales," Truby said. "The focus is on accelerating the product development. We're going to bring out more fuel-efficient, safe, very technologically advanced vehicles in the premium end of the market."

Odell is expected to continue cost cuts at Volvo that Arp had begun.

In June, the automaker gave layoff notices to 1,200 employees in Sweden as part of efforts to reduce costs by around 4 billion kronor ($662 million).

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