Sinking Swede? Ford devalues Volvo
Ford won't say what it thinks Volvo is worth, but the Blue Oval does believe that its Swedish subsidiary is worth $2.4 billion less than it was before. Although PAG, Ford's Premier Auto Group comprised of Jaguar, Land Rover and Volvo, increased its year-over-year revenue and pre-tax profit in 2007, Volvo once again posted a pre-tax loss for the year. In addition, with Ford's sales outlook for Volvo having been a bit optimistic, the brand's car production will be cut this year by 23,000 units. These are the reasons that Ford cites for the writedown, in addition to "an adverse model mix", i.e. vehicles that consumers don't seem to be interested in buying. Ford, however, says that this is not the first step in a Volvo sale and that it won't start building Volvos in America to counter the crappy exchange rates that jacks up prices.
Ford has largely kept Volvo out of the PAG fire sale discussion. Aston Martin found a new home just after it made a profit for the first time in years, and PAG's improved numbers last year were due solely to the barnbusting business being done over at Land Rover, which was good enough to put both Land Rover and Jaguar's combined business in the black. Ford has a lot of chickens closer to home that it's worrying about right now, but one wonders when it will publicly commit to doing right by Volvo (development-wise and model-wise) or commit to selling it.
[Source: Automotive News, sub. req'd]
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Reader Comments (Page 1 of 2)
Seoultrain 5:10PM (1/24/2008)
Ford can't even get out of its own way, much less provide the right amount of support/funding to volvo.
Thank god they're more hands-off with Mazda.
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BEN 5:22PM (1/24/2008)
What you should do is look in a mirror
and say 'very' slowly ....
so it has 'some' hope of sinking in ...
I SEOULTRAIN ... AM AN IDIOT !!!!
k.w.a 5:31PM (1/24/2008)
i think seoultrain has a point. look at all the cars that are/ were in the Ford Lineup:
ford: trying to get back on its feet
lincoln:desperately trying to get back on its feet
mercury: one f*ckup away from extinction
Land Rover: sold
Aston Martin: sold
Jaguar: sold
Volvo: being sold
Mazda's the only one that's actually in a good position right now (i think). My biggest question is, will Volvo be better off without Ford? I'm guessing they probably will
Seoultrain 7:08PM (1/24/2008)
Ben, while your post is a pretty creative way of calling me an idiot, why don't you make an argument. The only way you could get away with not actually saying something pertinent is if I said something so incredibly stupid that it doesn't warrant a response. If that's the case, perhaps you could make an exception and enlighten me as to why ford is a great company.
On a serious note, while GM is actively revolutionizing its line, Ford is content to wait for years and years until we can get its European cars here.
Bob L. 5:38PM (1/24/2008)
Sell Ford Keep Volvo
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Polly Prissy Pants 6:07PM (1/24/2008)
Volvo is probably just one more marque that needs to go away. The world really has no need for:
Volvo
Pontiac
Saturn
GMC
Saab
Aston Martin
etc
No, I didn't forget to put Mercury on the list. It has a place, Ford just hasn't come to understand what it should be just yet. Having all these brands to manage just eats up cash better spent elsewhere. For some reason Honda and Toyota get by with having two primary brands (Scion doesn't count - it's a waste too) so why do the domestics think they need so many?
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geo.stewart 6:44PM (1/24/2008)
well shoot prissy missy, let's just do away with all except one per mftr., or one per umbrella. a Volvo is just aa mazda 6 is just a fusion. A lexus is just a camry or avalon.
you want to do away with Volvo but not the badge-engineered/ trim level Mercury? Get real.
you want to dispose of Saturn, the only way to get some US-owned European vehicles, now that it has vehicles worthy of the legendary customer service?
you must be in automotive bliss
Seoultrain 7:04PM (1/24/2008)
The world has no need for Aston Martin?
get out.
Victor 7:32PM (1/24/2008)
Including both Volvo and Aston into that argument shows how little you know about vehicles.
dinnercoat 7:33PM (1/24/2008)
You mean the Ford Fusion is basically a Mazda6, not the other way around. Both are built from the "Ford" CD3 platform which was designed by Mazda "in association with" Ford, which I guess means that Mazda did the actual design work and Ford just takes credit for it.
Polly Prissy Pants 8:12PM (1/24/2008)
You're boxed in thinking about how things are today. Instead think about how they should be tomorrow. Just because something has a Saturn badge or a Volvo badge or whatever doesn't mean there's something unique to those cars that couldn't be done better and cheaper with some other plaque on the hood. Don't let convention trip you up.
OK, so I'll ask again. If Toyota can sell more cars than any other company in the world with (basically) 2 brands, why does GM need 10? Why does Ford need 7?
Paul P. 9:16PM (1/24/2008)
"OK, so I'll ask again. If Toyota can sell more cars than any other company in the world with (basically) 2 brands, why does GM need 10? Why does Ford need 7? "
Toyota owns Toyota, Lexus, Scion, Hino, Daihatsu, Aisin Seiki, part of Fuji, part of Isuzu, and tons of other companies. Just because Toyota and Lexus are their primary brands, doesn't mean it's the only brands they have.
Really, the question is, if Ford and Gm don't have a use for the other brand names they have, then why did Toyota recently introduce two new ones? Lexus in '89 and Scion since '03. I guess they realized they couldn't sell every type of vehicle under the Toyota name.
Fact is, image and brand identity matters. Let's say, if a guys father and grandfather only bought GMC, then chances are their son will only buy GMC. It's easier to keep the name when you take over the company, than hope the buyer will transfer over to Chevy (overlooking the F-series, Ram, ect).
Hans 11:38AM (1/25/2008)
Why in hell would the world need BMW? mercedes?Lada?or those crappy chinese cars?VOlvos and Saabs are needed to protect the life of The driver if the car crashes!They are the most safe cars in the world..arent they? besides Who are you to judge what car company should go?We could say the same thing that You should go!Why does the world need you?The world does not even know you.
Casey 7:11PM (1/24/2008)
Ok it isn't worth what it used to be, Ford is finally acknowledging that and now Ford has to make it successful one way or another, it's as simple as that. The leadership at Ford had better have a damn good game plan, and execute. Overall Ford can't afford to be wrong and if they ever decide to sell Volvo....hopefully it's to a strong player like BMW that would likely take Volvo beyond what Ford ever could do with it.
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dmerkow 7:20PM (1/24/2008)
Volvo's strength used to be the fact that their cars lasted forever and were built like tanks. That is Volvo Ford needs to get back to. Build lots of wagons with a few in go fast format. That is format for Volvo success. The key for Volvo will be the new C30, if it takes off, Ford has finally solved Volvo problem at the bottom end. Iterate that into the rumored four and five doors and try to get the vibe of the 240s back. Sell a Volvo purchase as a long-term commitment rather than the 3-5 years that most new car buyers look for.
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Sandy 8:37AM (1/25/2008)
One of the most complete and great luxury cars is the Volvo S80. It has features no other car has. Ford keeps it a secret. A secret that is also kept from the Infiniti/Lexus obsessed public.
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Sandy 9:07AM (1/25/2008)
I agree !
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_Jon 10:05AM (1/25/2008)
It would be *very* difficult for Ford to un-entwine itself from Volvo or Mazda. We use their basic platform for a lot of other vehicles we build. With AM, Jag, LR, they had a lot of their own underpinnings, or they used Ford / Linc / Volvo elements. If you read the details of the Jag/LR sale, you will see that there are commitments to continue to purchase Ford / Volvo drivetrains, suspensions, and other components. It is $2 b for the name, plus extra for the supplies.
A lot of Volvo's safety features are in use in many of Ford's (especially Lincoln's) cars. Crash technology, anti-crash technology, weight reduction, and environmental features all have huge transfer from Volvo to Ford. Similar with Mazda, but on the low-end of the vehicles.
Also, keep in mind that Volvo, Jaguar, and Land Rover were purchased by Ford when Jaques Nassar was in charge. He is a great 'mergers and acquisitions' guy, with great vision. But he hated the US auto designs and intended to do away with all North American designs. He gutted the engineering staffs here. Heck, when we released the latest T-Bird, we had *no one* who had ever developed a convertible. Even the crew who worked on the last Mustang had been 'retired'.
His plan was to design high-end cars and import those designs into the US. The problem with that is that you _cannot_ design a car high-end, then cheapen it. It _must_ be done the other way around. Just look at the $20+ b that we have lost in the past three years for proof that it doesn't work.
So, please, when you toss about ideas for what Ford should and shouldn't do with PAG, keep in mind that it wasn't a well thought-out, well implemented plan. It was a spending spree that nearly destroyed everyone involved. It is going to take more years of work to get things straight again.
These bad times are bad, but at least it is giving us the focus to change our basic work ethics. Even today, we still have middle and lower management, plus employees, who think they can keep working the way they've worked for 30+ years - because "The Company is out to screw the employees over". It is a tough challenge to either convert their thinking or move them out of their positions of power.
Bill Ford admitted that he couldn't make those changes and that is why he hired Mullaly. Read the Newsweek article from 2006 before Mullaly's hiring was announced. Bill says so. Things don't change quickly because of stubborn people. And it isn't possible to just fire someone because of the other stubborn people (plus lawsuits). It is a big problem, with no easy solutions.
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Perry 1:46PM (1/25/2008)
Lower the prices! That will fix sales....(a bit). They are asking too much money for these cars. $40k for an S40????? Get real....!!!!!!!!
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arthur 7:33PM (3/14/2008)
Ford has done its due... I know many people who wouldn't go for Volvo because Ford bastardized the design and forces their "high" standard on Swedes (not that their - Swedes - product is of good quality!) Volvo is now Ford spec car in disguise with a Volvo flavor. How can you use a Ford Taurus like V6 in a Volvo? Safety - heard rumors that say...roof is no longer what it used to be... but cheaper!!!
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