Sweden’s Dagens Industri reports [via Reuters] that Ford is not spoiled for choice when it comes to selling the money pit known as Volvo. Despite speculation about a Swedish group’s offer for the moribund manufacturer, China’s Geely Automotive has submitted the only concrete bid so far. You may recall that FoMoCo CEO Alan Mulally began his administration by swearing up, down and sideways that Volvo was not for sale. Last month, The Glass House Gang announced that it was “in discussion” with a “number of interested parties” to ditch their Swedish subdivision. Party of one? As we’ve said before, Volvo would be a coup for Geely—countering America’s distrust of China’s ability to create safe products in a single stroke. While Ford could use the money (and how), dumping Volvo on the PRC would give Geely traction in both China and, eventually, the US of A. What’s a mother to do?
You may recall that FoMoCo CEO Alan Mulally began his administration by swearing up, down and sideways that Volvo was not for sale.
I would say the collapsed economy has changed a lot of things wouldn’t you? You have to do what you have to do to survive.. Except of course…let the government bail you out….
I’ve said repeatedly that Ford putting Volvo into the hands of a Chinese competitor would be a strategic blunder of the first degree. The amount of cash saved on the front end would likely end up being swamped by the losses of having to compete in the global markets with a Chinese based company which suddenly finds itself holding some crown jewel worthy intellectual property, intellectual capacity and worldwide brand recognition. Ford clearly has its sights set on being in the very top tier of global automotive companies. Helping the Chinese compete would not be consistent with that objective.
Volvo is not a lost cause permanently doomed to loose money. All that is needed to turn it around is to make the correct decisions.
Ford needs to keep Volvo out of Chinese hands. At all costs.
Instead, halt production in high-cost Sweden, move production to low(er)-cost North America (Canada? to replace the Crown Vic), take a bunch of Ford’s European products (Mondeo, Kuga, et al) and surgically affix the Volvo grille and other styling affectations, and wa la! A new, cheaper, profitable (?) Volvo is born.
Except for safety research, shut down Volvo HQ and let Ford Europe do Volvo’s product design and development (why not, since the C30/S40/V50 share the Euro Focus’ C1 platform).
I know, it sounds like something GM would do, but Ford’s got to do something dramatic.
Volvo also needs new marketers. Now. Selling the S80 based on a feature that can detect an intruder’s heartbeat is hardly compelling advertising. Also, they have to get rid of the ridiculous charge ($300) they tack on IF you merely want to add some options to the car (this is in addition to the cost of the option).
It all depends on what they get for their money. Much of the innovative items that Volvo held are now integrated into much of Ford’s present offerings and there must be more things that they gleaned from Volvo coming in the future.
The Chinese are hungry for a worldwide brand and might be willing to accept terms and conditions on proprietary items which Ford now views as theirs and not for sale.
I really don’t think Ford needs Volvo. Ford’s having enough trouble as it is turning a profit on ford,lincoln and mercury and they are making better vehicles than ever before.
For the relatively small sums Ford got for Jaguar, Land Rover, and Aston Martin, I don’t think it should have let those go either, or at least made it a condition of sale that Ford retained all IP and technology of those brands.
Many people say Lincoln is in need of a RWD full size flagship, and Ford had one on hand in the form of the Jaguar XJ, why not just use that to base a new Lincoln, or to get really crazy, optimize one of the Aston Martin platforms for economies of scale and go that way.
I don’t blame Ford for dumping Volvo one bit. Aside from the XC60, Volvo’s lineup is a dud right now, and I haven’t seen anything coming down the pike that would brighten the future.
I’d say, sell it now if they can get a fair price, and go with Lincoln as its luxury nameplate.
James2 :
August 29th, 2009 at 8:15 pm
Volvo also needs new marketers. Now. Selling the S80 based on a feature that can detect an intruder’s heartbeat is hardly compelling advertising.
James – have you DRIVEN the S80? I have, and I can tell you firsthand: aside from gadgets, there ain’t much to hang your hat on, marketing-wise, with that car. It’s the blandest car I’ve ever driven.
I haven’t driven a S80, but from what I hear it has incredibly comfortable seats as well.
Volvo doesn’t have anything on the table to compete in the luxury-performance segment with Mercedes, BMW, Infiniti, Audi, or Jaguar right now. Its closest match would be Lexus, for the luxury without hassle market. The problem is, Lexus already has a bulletproof reputation for reliability, while Volvo’s old standby of safety, while possibly class leading, isn’t enough to draw in the customers anymore.
I see a perfect opportunity for Volvo to aim at and profit from masculinity however. Lexus vehicles, perhaps apart from the LS, are all pretty feminine, from the styling, to the marketing, the to image. The man who drives a Mercedes buys a Lexus for his wife. Volvo has the chance with its strong broad shouldered Swedish design, perfectly masculine logo, and minimalist aesthetic to carve a niche as the man’s luxury car. Not targeting boy racers or mid-life crisis flashiness, but stoic, simple, “speak softly but carry a big stick” manliness.
FreedMike :
August 29th, 2009 at 10:01 pm
James – have you DRIVEN the S80? I have, and I can tell you firsthand: aside from gadgets, there ain’t much to hang your hat on, marketing-wise, with that car. It’s the blandest car I’ve ever driven.
No. Can’t say I have or will drive the thing. It looks good, though, if a little too much like the S60. Maybe Volvo needs to Bangle their styling to get people to notice them.
Volvo cannot hang with the likes of BMW or Mercedes, so they should aim lower –and price themselves accordingly.
I honestly do not see any value in Volvo (even though I think the XC60 is a wonderful car).
Why would anyone buy a Volvo over a German or a Japanese luxury brand?
If Volvo goes downmarket, who will it compete with? VW? If you push it further down into Camry territory, it will compete with Ford’s Fusion and Taurus.
It’s a rare day that John Horner and I disagree, but I say good riddance. What technology is Geely going to get that the Chinese JVs with all the Europeans doesn’t give them access too?
And what did SAIC get from their purchase of Rover get quite a few years ago? Keep in mind that the Rover 75 sedan was a recent ground-up new state-of-the art (and quite good) car developed by BMW. Did that make Rowe a threat to the Western world?
I think the Chinese are going to have their hands full trying to make Volvo successful in the current (and not likely to bounce back quickly) Western economies’ competitive environment. I think they will mainly capitalize on the acquisition in China, where the name will give Geely a premium brand under their control. But there’s nothing to suggest that Geely will turn Volvo into a threat in Western markets. If they can, more power to them.
you are all crazy volvo is the best car out there it is the safest and most reliable benz lexus suck in comparison ford is doing good now wow thats a shocker dont they own volvo so yeah there ganna do good when they are tacking volvos stuff and putting it into there cars so wow they should be doing good i hope that volvo dose good they where the first to put the seatbelt into there cars laminated glass into the windshield so if you think about it there is a volvo in all your cars and if you got into a crash you owe you life to the volvo comp for saving your life. they arnt the prettiest of cars but they are the safest and to let you know they are coming out with some nice new cars s60 hard top concept coming in 2010 a nice new c60 convertible and a ton of other concept cars they just want to mack shure they are safe befor they go on the road…and volvo dose not need to shut down its research division that would be lame thats what makes volvo volvo ford can go sit and spinnn.
In Carmaker’s Collapse, a Microcosm of South Korea’s Woes
NYTimes
“Chinese company BOE got the technology they wanted. All we got was layoffs,” said Hwang Pil-sang, a Hydis worker.”
“We trusted their promise to help us into the vast Chinese market,” Mr. Yang said. “In the end, they kept none of their promises, and they got what they wanted: our technology.”
http://www.nytimes.com/2009/02/24/world/asia/24seoul.html?pagewanted=1&_r=2&ref=asia
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1. Volvo is a next ssangyong.
2. After chinese company get the technology they wanted. All volvo workers will be dismissal.
3. After chinese company get volvo technology, Chinese company kill US auto industry ‘first’.
I think this is only begining of invading from China.
After 20 years, After US auto industy died, ‘made in china’ cars fill US road.
Don’t sell volvo to China!!
American surrounded by entirely ‘made in china’ stuffs. ‘made by usa’ is no more.
I recently drove the C30. Not a bad hatch; in fact, it was very nice–to a point. The deal breaker was a sticker price of 26 large. At the same time, it was a stripper without cruise control. Who even makes a car w/o cruise control, anymore? Plus, any options required a $300.00 fee on top of the price of the option ordered. I’m guessing Volvo isn’t selling many of these. For that price you can drive away with a nice GTI or Mazda 3 (if you can live with the goofy smile), both w/cruise, and a lot more. When I was growing up, Volvo had a certain cache–that of a safe but decidedly boring family car. It was what they were, and they were successful. Who knows what they are, now, or if they will even be?
Finally, this Chinese thing is getting out of hand. I recently read an article in The Asia Times speculating that NATO may “invite” upwards of 50,000 Chinese troops into Eastern Afghanistan in order to “help smooth things out.” I think this sort of speculation is way over the top, and I don’t see NATO (or Russia, for that matter) ever allowing it–nor do I see the Chinese being interested (I think they are too smart); but stranger things have happened, and it shows you how far along the Chinese have come in the eyes of the world. After all, 10 years ago who would have used the words China and Volvo in the same sentence?
The main thing wrong with the present Volvo lineup is that the prices are too high. With Chinese production and a 30-50% reduction in prices the Volvo lineup would be selling like hot cakes.
Ford has benefited greatly from the alliance with Volvo, Volvo has stayed afloat too. But if the numbers on sales don’t come in it’s either sell the furniture or take Uncle Obama’s money and assume the position. The Ford family won’t agree to that and shouldn’t.
It would be nice to have at least one original car company not controlled by Da White Howze
“As we’ve said before, Volvo would be a coup for Geely—countering America’s distrust of China’s ability to create safe products in a single stroke.”
Not likely. Anything the Chinese touch they cheapen through cost cutting and poor workmanship, just look at kids toys and the quality problems there.
“Anything the Chinese touch they cheapen through cost cutting and poor workmanship, just look at kids toys and the quality problems there.”
Meanwhile, China increases its market share of manufactured product (including toys) nearly every day. The high profile news reports about lead paint and such were a PR nuisance to the industry, but the move of nearly all production to China in toys, sporting goods, appliances, electronics and more is nearly complete. Where do you think the gotta-have toys like iPhones and flat screen TVs are made?
I think Paul and I see this situation from different sides of the glass half-full, half-empty divide. If Volvo is really a dead man walking then it doesn’t matter who gets a hold of it. If Volvo is a batch of valuable assets which have been recently mismanaged, then putting it in the hands of a competitor who is rapidly coming up the learning curve could lead to real headaches. So far the Tata-Jaguar-LandRover deal argues for Paul’s view. Tata has to date done bupkiss for itself with the still money loosing English patients.
Volvo shoulda been as integral as Mercury, esp considering the technology shared from everything from headrests, safety gadgets and the unappealing D3 platform. You know, in a perfect world.
But Ford doesn’t have the time or money to integrate Volvo’s operations entirely with Ford Europe, much less Dearborn. And if they never bothered to make the hard decisions (too many platforms, not enough sales) back in the days of the Premier Automotive Group, does anyone really think they can turn this sinking ship around now?
And yes, I do know that Volvo was the most profitable part of PAG, but that’s like saying the Chevy Aveo is better than taking the bus.
So I’m with Paul, good riddance.
Chinese companies doing the same thing Ford did 10 years ago and the reasons are the same – megalomania and overconfidence.
Let them have Hummer and Volvo. Maybe we can sell them Pontiac for a few bucks.
FreedMike wrote:
I don’t blame Ford for dumping Volvo one bit. Aside from the XC60, Volvo’s lineup is a dud right now, and I haven’t seen anything coming down the pike that would brighten the future.
You say that as if the current product lineup was somehow Volvo’s fault … and not Ford’s (who were in fact calling every shot). Funny that folks are so worried that the Chinese will strip out the IP, lay off the workers and drive another storied old brand into the ground … when that’s exactly what Ford and GM did to Volvo and Saab.