Speaking to [financial] analysts at Ford's conference call for Q3's financial results, Ford CEO Alan Mulally announced that the Blue Oval Boyz are going to hang onto their Swedish captive import for a while longer. "Our plan now is to not sell it and to focus on improving, especially, the cost structure and the position of the brand itself reflecting their new terrific lineup of cars and trucks." Wow! Alan calls SUVs trucks now! How car guy is that? Anyway, about that brand positioning… "They are really moving to a more premium brand, improving cost structure." So, no word for Volvo's brand postition other than "premium." You know, like safe. Or safe! At least Volvo's safe from Ford's axe for the time being. But are they safe from the prospect of losing money? "They're going to be fine," Mulally told the automotive egg-heads. "I think." He thinks? He THINKS? Will someone buy this guy a copy of The Little Engine that Could? Oh, and the AP reports that Mulally left the door open to the possibility of kicking Volvo out. "Ford will continue to review the brand periodically." How reassuring.
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Sounds like Alan issued forth a resounding proclomation of, “Meh” for Volvo.
So when Mr Mulally said “Ford does not need a global luxury brand to survive” what he actually meant was “Ford does not need a global luxury brand to survive, but we’ll keep one for a rainy day?”
This doesn’t come as much of a surprise to me. Mazda and Volvo have helped Ford engineering quite a bit. It’s would behoove Ford to hold onto them.
At least Mulally is better than Lutz and Wagoner blowing smoke. Basically saying hey if Volvo performs well in our plan we’ll keep it if not we’ll cut it loose. Can’t say I’m seeing the problem with his choice of words.
Steve_S: Can’t say I’m seeing the problem with his choice of words. I've got no beef with the content. But the style's got me spooked. Did I say style? What style? Where's the passion? Where's the line-in-the-sand leadership? "Volvo makes the world's safest cars. The brand is an integral part of the Ford family that bless us with technological excellence. I would no more sell this company than chew my arm off. We are 100 percent committed to making Volvo one of the world's most profitable car companies, bar none."
“Mazda and Volvo have helped Ford engineering quite a bit.” Actually, I would say that Mazda and Volvo management have helped Ford quite a bit. Their product development processes are much faster than those at Ford, who is too beurocratic to introduce new products at the rate they can.
Ford needs Volvo to design their cars for them, since Ford has laid off all of their in-house talent.
How is the sales of the cut-rate Volvo Taurus going?
“Volvo makes the safest cars in the world”
Afraid that’s no longer true. Renault do. Just ask EuroNCAP.
KatiePuckrik:
“Volvo makes the safest cars in the world”
Afraid that’s no longer true. Renault do. Just ask EuroNCAP.
Um, “some” of the safest cars in the world?
Mr Farago,
Yup, I’ll let you have that one…..!
Don’t let me have to correct you again! ;O)
Expect no passion from Alan Mulally, in regards to automobiles anyway. In business school, and even in university advertising classes taught in communications departments, the term “widgets” is usually employed when talking about selling a product. To those of us who look at automobiles as something other than disposable devices, it’s sad but true that Mr. Mulally is a guy to whom the products he now oversees are “widgets” and Volvo, Land Rover and even Jaguar are “brands” instead of “marques.”
If he talked straight, he’d probably have said, “Volvo still makes us some money, and besides, we share a lot of engineering with those cars in things we badge as Fords. Right now, we want to concentrate on getting rid of Jaguar and Land Rover, as soon as we can – assuming we can find anyone who wants to buy them. Jaguar compares well to cars, such as the Lexus I used to drive; but we have to ask so much money for it and that segment of the market is so competitive, it’s a hard sell.
“Land Rover is sort of the same. It’s hard to beat the Japanese makes, with a SUV that costs around 70 grand to start. Well, there’s that little SUV Land Rover makes but hardly anyone seems to even know that thing exists.”
I’ve got no beef with the content. But the style’s got me spooked. Did I say style? What style? Where’s the passion? Where’s the line-in-the-sand leadership?
I wouldn’t expect too much of that from an ex-CFO. Same deal with Wagoner and Nardelli. They are all number-crunchers, mullah guys, not passion guys.
Is there much passion in finance (besides passion for money)?
That’s of course unfortunate, but here we are. At least most of the Germans are real car guys. Doesn’t make them smarter (just see some of their brand evolutions), but they’re quite passionate.
Engineering trumps finance in Germany when it comes to influence within a company. It’d help if Sales were more influential, though.
What’s the problem with this statement? Volvo will be branded more upstream than present, and like EVERYTHING else in the world, it’s for sale. Not now, but maybe later. There’s no reason to make concrete statements because at this point nothing is. A definitive statement just doesn’t leave room for doing what’s right in the future without looking like a liar. Also, that Ford is “learning” all this info from Volvo isn’t the case. Ford’s safety engineer’s have their own plans and knowledge, which differ from theirs. Going forward their will be sharing, but it isn’t Volvo just tossing it over the wall, as their solutions are more costly than necessary. Ford is becoming a safety leader on it’s own. Further, Volvo has as many Ford platforms (C1) as Ford does Volvo (D platform). Likewise, their management isn’t bringing anything to the table but a costly structure. They are a strong global brand with a decent rep, but it’s not a benchmark for Ford the way some must think.
Here’s hoping Volvo AB wises up and takes back Volvo Cars…
I just hope there is some means of Volvo surviving if Ford goes chapter 7 (worldwide shut-down bankruptcy – as in “like Pierce Arrow” or “like Borgward”).
I kind of like Volvo’s, my sister has one and it’s a pretty decent little overpiced euro-car. A mate of mine in England had one and it was a pretty good car (it was the 240). My sister used to have 240’s, went to Nissan for a Maxima then some ugly-ass Nissan SUV, then back to Volvo.
Mazda “should” survive a Ford total collapse, if it happens, as Ford only owns about 35% of Mazda.
RLJ676: “Sorry to interrupt the Ford hate orgy…” I don’t hate Ford. I’ve leased a new Ford every 2-3 years since 1993. They’ve been OK. Right now I drive a 2007 Fusion SEL. Love that car. My wife want’s one now that she’s driven it. Growing up in Dearborn MI, it was all Ford all the time especially with frequent visits to Henry Ford Museum. I’m pulling for Ford and hope they can turn it around.
I can see your point RF but like other’s said he is a numbers man, he’s CEO not a spokesman like Lutz is. If Lutz didn’t say so many stupid things I’d actually like him, he’d make a really cool granddad.
Mulally is talking straight with a little shine on it. I think we need to credit a man that says we are working on our turn around plan and I think its solid but we are on a race against the clock and I can’t say for certain we are gonna make it.
I think if Ford starts bringing capacity in line and starts selling more product (I think the Flex will sell fairly well but they need to rim a little and do something with Mercury) and we see positive numbers you may hear a little more passion or upbeat-speak from Mulally.
Steve_S:
I think if Ford starts bringing capacity in line and starts selling more product (I think the Flex will sell fairly well but they need to rim a little and do something with Mercury) and we see positive numbers you may hear a little more passion or upbeat-speak from Mulally.
Anyone can be positive when times are good. The time to be positive/authoritative/clear is NOW.
Ford really needs to find a clear vision for Volvo, or better yet, a cash buyer for this declining brand. It is becoming less and less clear what mission statement of the Volvo brand is meant to be.
Safety? Every brand markets safety, and who is to say a Hyundai is any less “safe” than a Volvo these days?
Performance? Volvo failed with the R models (S60R/V70R)in an era when nearly every BMW has the sport package and AMG Mercedes are selling in ever larger volumes.
Prestige? Does anyone believe that a Volvo has the image of Mercedes or even a Cadillac. Look at what Consumer’s Report said about the S80 in a recent test. Volvo isn’t a prestige brand, never has been, and at this rate, never will be.
Reliability? Who honestly believes that a Volvo can match a Toyota? Or a Hyundai? Or a Buick, for crying out loud!
Volvo needs to be reinvented, and the current C30 and upcoming XC60 aren’t enough to turn around the brand.
Reliability? Who honestly believes that a Volvo can match a Toyota? Or a Hyundai? Or a Buick, for crying out loud! Well, there’s a lot of older Volvo owners out there pushing over 250,000 miles, including me. Volvo had a bit of a rough patch in terms of reliability when Ford took over, but they seem to be back on their feet. A Volvo not reliable? Puh-lease.
Much as I hate to say it, the truth is that Volvo is doing better as a business under Ford than it was doing while still joined to the Volvo AB of heavy duty truck fame.
When Ford bought Volvo all Volvo had were four derivations on the 850’s platform: C70, S70, V70 and S80. There may have also been a smaller model not sold in the US. Today Volvo has moved additionally into the crossover market with the XC70 and XC90, the small premium market with the S40/V50 and the small fun market with the recent C30. Sales are holding strong in a tough market and news accounts have generally credited Volvo with being the only consistent profit generator in the now-almost-gone PAG sector of Ford.
Compared to the hatched job GM has done on Saab, Ford’s ownership of Volvo is praiseworthy. As long as Volvo continues to make profits there is no reason for Ford to sell it in a fire-sale atmosphere. Unlike many mergers, it seems that both Ford and Volvo are getting value added from their relationship, just as Mazda and Ford do. Ford is smart to hold on for now. If some day somebody wants to offer a high price, that would be the time to sell.
In the unfortunate event that I am to crash my vehicle I would take my chances in a Volvo over a Hyundai. Not to say that a Hyundai is unsafe but let’s be real.
Didn’t Volvo have boundaries on how much of it’s safety and innovative technology it would just hand over to Ford. I remember reading(from some Volvo rep) years back that they shared technology and safety up to a point and then each went his own way to a final product. I think they were refering to the advanced roll-over technology when it first came out. It basically said “your not going to get the same safety from a Ford as you do a Volvo even though they own us because we aren’t giving our safety image away.”
Did something change in recent years because they don’t even push safety like they used to and now Ford is claiming the safest car.
Ford advertising has always seemed like a big lie to me. Remember the ads that stole Jaguars history and heritage and claimed it was Ford’s doing just because Ford happened to owned the company that week.
Volvo is the only thing Ford has in its favor. Look at the innovative styling of the new Focus. What a shame!
Did I just read that Mulalley said that Volvo was going to go further upscale AND cut costs? Hmmm, first thing you learn in Strategy is that the basic choices are low cost OR premium quality.
You can’t do both. It’s impossible. And if you try, it means you don’t have a clear brand positioning, which means you are sunk.
Too bad; I thought the C30 was kind of cute.
I have always held the position that sharing and innovation and engineering should flow both ways in an automaker….the premium brands learn how to get a little more cost effective from the high-volume, low cost lines, and the hi-volume, low cost lines get a little engineering and gussy-up from the snooty brothers…I see that a smidge at Ford…but not enough….(too much sharing would be worse….then you wouldn’t be able to tell a Fusion from a S90….but FORD, FTLOG, why didn’t you bring the EuroFocus and the MONDEO to the states? STOOOOOOPID…the yank focus is a POS.
Terry Parkhurst: “Expect no passion from Alan Mulally, in regards to automobiles anyway. In business school, and even in university advertising classes taught in communications departments, the term “widgets” is usually employed when talking about selling a product. To those of us who look at automobiles as something other than disposable devices, it’s sad but true that Mr. Mulally is a guy to whom the products he now oversees are “widgets” and Volvo, Land Rover and even Jaguar are “brands” instead of “marques.””
And Bob Lutz is a passionate car guy. If Mullally never produces the SSR, then chalk one up in the “win” column for the passionless business school grads.
And it’s also OK if Mullally isn’t a passionate car guy if he has the right people bringing him designs and doesn’t screw around micro-managing things. If the ideas and plans bubble up and Mullally green-lights the right ones, then he’s doing a very good job as CEO.
I’ve always felt that products such as the Five Hundred / Taurus and the Freestyle / Taurus X should have been marketed as Volvos and given all the qualities of that marque. If you provided these models with a nice looking exterior and upgraded the interiors a bit, you would potentially have two striking vehicles that could have taken on any vehicle in their class.
A Volvo 350 (nee Taurus) with a better engine and ergonomic design would definitely compete well with the Lucerne and Avalon. In fact, it would clobber them given how bland the other two models are at the moment.
I would have marketed the Freestyle as the V350 and simply eliminated the cheap moldings that adorn the current model. It’s actually a very nice vehicle to drive, but the overall design of it is simply too Lego-like to compete with comparable vehicles. To give you a frame of reference, I just had a 2005 Freestyle with 59k, base model, sell for only $7300 this evening. That’s about a 70% depreciation rate in two years. Ouch!!!
How on earth can you “improve cost structure” on a premium, low(ish) volume model range? This ain’t a bargain basement Fusion, its not even a mid-line Mondeo.
Given their limited time and resources, Ford has bigger fish to fry. And this is the only asset they can quickly exchange for some serious green.
Then again, if they sold Lincolns at Volvo dealers you could kiss the entire Lincoln-Mercury division goodbye.
How on earth can you “improve cost structure” on a premium, low(ish) volume model range?
Parts and platform sharing. Unfortunately, it’s all too tempting for the domestics to run with that ball too far by diving into the evil abyss of badge engineering.
“Given their limited time and resources, Ford has bigger fish to fry. And this is the only asset they can quickly exchange for some serious green.”
Under current conditions Ford can’t get much cash for Volvo because it is viewed as a fire sale situation, and nobody is lining up to buy automakers today, unlike in 1999 when there were bidding wars going on for the likes of Volvo, Rolls-Royce, Jaguar and Land Rover.
Volvo has a well established business with plenty of capable people top to bottom. Unlike Jaguar, it was a growing and profitable company when Ford bought it. Ford top management really doesn’t need to spend much time thinking about Volvo issues and can go about fixing the mainline business. The one massive business issue Volvo faces right now is that the US remains it’s biggest market and the dollar is very weak right now. Volvo builds all of it’s products in Europe where the currency valuations visa-vis the dollar have to be putting a world of hurt on them.
The “strategic plan” talks about making Volvo more independent and releasing separate financial results for it.
Sounds like they’re simply forgoing a sale today to get a higher price tomorrow.
KixStart: And it’s also OK if Mullally isn’t a passionate car guy if he has the right people bringing him designs and doesn’t screw around micro-managing things. If the ideas and plans bubble up and Mullally green-lights the right ones, then he’s doing a very good job as CEO.
Bingo! We have a winner!
What Ford needs is a CEO who can properly bring to fruition good ideas, and get out of the way when necessary. It also needs a CEO who can reform a dysfunctional corporate culture riddled with executives more focused on protecting their fiefdoms than producing great cars and trucks.
Mullaly received a big boost when Ford’s board reduced the power of the Finance Committee to veto new products or product upgrades.
Is Mullaly the right person for the job? Don’t know for sure yet, but so far I like what I see…