DETROIT - FORD Motor 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 US$25 billion (S$38 billion) 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 per cent in morning trade, but gave up the gains to trade 23 per cent lower as of 2.26pm (2.26am Singapore time), 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 Mr 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,' Mr Allon said.

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

Ford burned through US$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 US$17 billion in liquidity through 2010.

Volvo is the last remaining brand from Ford's former premium auto group that had included the now-divested Aston Martin, Jaguar and Land Rover brands.

Earlier this year, Ford sold its luxury Jaguar and Land Rover brands to India's Tata Motors. Ford also agreed to sell about two-thirds of its 33.4 per cent stake in Japanese automaker Mazda Motor for around US$538 million in November.

Reeling from the decline in US auto sales to 25-year lows, Detroit's three ailing automakers - Ford, General Motors and Chrysler - are desperately trying to raise cash to survive the worst economic crisis since the Great Depression.

The three US automakers are scheduled to submit extensive restructuring plans to Congress on Tuesday as a condition for considering US$25 billion loans for the cash-strapped industry.

'Given the unprecedented external challenges facing Ford and the entire industry, it is prudent for Ford to evaluate options for Volvo,' Ford Chief Executive Alan Mulally said in a statement.

Ford said the review of Volvo will likely take several months to complete.

Buyers' market
Volvo would join a crowded field of automotive brands being shopped around at a time when many potential buyers have pulled back. GM is trying to sell its Hummer SUV brand and could opt to unload other brands as part of its own restructuring plan to be submitted to Congress.

Chrysler's private equity owner Cerberus Capital Management has been looking for a buyer for all or part of the No. 3 US automaker and has examined plans under which it would sell off specific vehicle lines, such as its Ram pickup trucks or its Jeep SUV brand.

Ford had said throughout this year Volvo was not for sale, but sources with knowledge of the situation said Ford held talks with Renault-Nissan and Hyundai Motor Co about selling the brand.

Renault-Nissan Chief Executive Carlos Ghosn last month ruled out any acquisition or partnership that would involve a cash outlay, saying that his priority was to protect the liquidity of the existing alliance because of the steep and unpredictable global downturn in auto sales.

US light vehicle sales for November, set for release on Tuesday, are expected to show only a limited recovery from October, when sales plunged to a 25-year low.

Earlier on Monday, automakers reported tumbling sales for November across Europe and in the markets of Japan and South Korea. Spanish sales dropped by nearly half in November, the biggest sales decline in that market in nearly 16 years.

In mid-afternoon trade, shares of Ford were down 10.4 per cent, or 28 cents, to US$2.41 on the New York Stock Exchange, after earlier rising to as high as US$3.00. -- REUTERS