rhumb

Is it me, or does Ford seem ardent on selling off Volvo for some reason? And if so, why so ardent?

Selling off Jaguar made some sense perhaps, even if the timing was typical-for-Ford poor -- just as the excellent XJ-F and XK-R are starting to take off sales wise. But with the demise of the T-Bird and Mercury LS, there was little interchange in parts and platforms between the two companies. So Ford, so painfully desperate for cash, sells Jaguar off to India's Tata for fire sale prices just as the marque is finally hitting its stride.

But Volvo seems to have much closer ties to Ford in terms of drivetrains, platforms and engineering exchange. Volvo sales, while not setting the world on fire, seem solid and has a very dependable base. While current Volvos may be a bit staid -- when were they not -- which may have put them slightly out of sorts with the big, brash and gaudy 1990's and early '00's, they may well fit in perfectly with the more sober and sensible mood of the market today.

One reason, at least from Ford in Detoit's perspective -- other than grub for cash, now -- is some overlap between their two "not-invented-here" arms: Volvo to the east and Mazda to the left. It's probably hard for Ford's suits to stomach not one but two overseas branches developing and building better technologies and cars than Detroit itself. And now that Detroit's oh-so-myopic sole dependence on big truck/SUV sales is folding up like a cheap lawn chair -- an obvious and stinging rebuke to their managerial and strategic thinking -- to accommodate not one but both of Ford's "fur'n" underlings that have obviously done much better in that regard might be too much to bear.

But rather than cutting off perfectly good arms and legs, perhaps Ford/Dearborn needs to swallow its hollow price and simply utilize them in a more concerted manner than before. Mazda especially has a rock solid engineering ethic as does Volvo. Both companies seem to be run be real car guys/gals than the woe begotten MBAs clotting up the suites in Dearborn. Better to focus and coordinate these strengths rather than do away with them.

If there's one thing Ford needs to survive is good, solid, viable product in the small to midsize car range, which are these companies/divisions strengths and will be the main competitive arena in the future. Mullaly seems to get this and has put on his steel tipped boots to kick some reluctant upper management butt in the moldering halls of Dearborn to move decisively in this direction.

If Ford's going to sell off anything, get rid of whithered-arm Mercury like, yesterday. Talk about redundant and useless, but who'd give Ford more than a warm cup of joe for it anyways.

Hollywood_North GT

Short, oversimplified answer: Killing Mercury will cost Ford money. Selling Volvo will make Ford money.

Desperate times call for desperate measures.

the procrastinator

Okay, I'll bite: how will "killing Mercury" cost Ford money? Which Mercury product is selling like hotcakes right now? Does Ford still need mid-luxury clones of it's Ford product line?

Strickland

I think it would have to do with the labor unions and having to 'buy off' all the Mercury production line workers.

V10

Mercuries are made on the same production lines as Fords are.
There's no such thing as a Mercury production line worker.

Strickland

Then I sit/stand/am otherwise corrected.... I don't know why it cost to cut Merc...

SuperSugeKnight

Sell the Mercury name?

2k7gtcs

Ford needs Mercury like GM needs GMC or Buick for that matter. Nobodys buying these cars. The local independent Lincoln/Mercury dealer was bought by the Ford dealer a few years ago. Now there's no Mercurys on that lot. Ford needs sedan it can sell against Camry/Accord and another it can sell against Corolla/Civic. They may have one, but I don't know what it is and therefore the marketing ain't working. A couple of years ago it was nothing but Explorers, Expeditions, Windstars, and Mustangs. Now where is a car lot full of these gonna get you?

bob

Probably Merc dealers, when GM axed Olds, they had to buyout the dealerships IIRC, plus there was some market share lost. In Mercury's case I suppose the latter is a non-issue

Hollywood_North GT

If you want to know why killing Mercury would cost money in the short term, just look at how much it cost GM to close down Oldsmobile. Shutting down Mercury means killing franchises, which means Ford will have to pay owners cash - thereby impacting desperately needed cash flow.

I, too, am of the opinion that Ford should kill Mercury ASAP. It's the only feasible long-term strategy for them. I'm just not sure they can financially afford it right now.

htwag

There are laws in each state plus federal ones that protect franchees from the market choices that the 'parent' company makes. Ford just can't "stop" making Merks because of these laws. Does Foird need the Edge, the Flex and the Taurus X?

Black331

Ford is in alarmist/desperation/knee jerk time..

I hope they keep Volvo, instead of selling off everything, how about making it work? There's a radical idea!

rhumb

I suspect Ford, after looking at the costly death of Oldsmobile is rather, letting Mercury simply whither on the vine rather than making an active corporate decision to kill it outright. The latter would, like Oldsmobile, incur a huge cost burden while the former, simply letting the franchises go out of business, would not. So I would expect a dribble of ongoing lip service from Ford in support of Mercury but no actual real product or commitment to actually sustain it.

In a few years, once the Mercury franchise has shriveled to a couple of skeletal dealerships, it would take but the change out of the corporate lint trap to buy those few out and shut the whole pathetic mess down.

A shame because I think what GM is doing with Pontiac and/or Saturn points to a possible, though by no means given, route to viability. Personally, like Saturn is evolving to be and Pontiac too, is for Mercury to become FoMoCo's North American storefront for all the coveted (by those in the know) Euro and Aussie wares that Dearborn itself seems truly reluctant to bring over.

V10

I keep reading how Saturn is hurting.

jsaylor

I think there exists the potential for a profitable and distinct Mercury brand, but the road to this end would be costly and I'm no longer certain that FoMoCo can afford to divert profits to such a venture. As for Volvo, moreso than Jaguar or Land Rover I think Volvo has kept Ford's execs scratching their heads. With Jaguar and Land Rover you could always point to a glaring error on Ford's part which led to poor results when things were bad, but with Volvo it was never so simple. Ford' track record with the Swedish brand was never perfect by any means, but even good effort never seemed to be rewarded with the kind of success one would expect.

I think a large part of the problem is that the Volvo brand has been pigeon-holed through years of perception (based in reality fwiw) into a limited volume near luxury role....sort of a more upscale Swedish counterpart to Subaru if you will. And, IMHO, the brand could likely thrive in this role but, addressing the volume issue again, I don't think volume would ever seriously exceed Volvo's best efforts to this point. The only plausible alternative to the above I can see would be a full scale, monetary effort aimed at bringing Volvo fully into the luxury car segment alongside brands like Audi and Mercedes. I think there is a good possibility that Volvo could do well here as well, although as mentioned above it would likely be an expensive road to travel.

Unfortunately it seems that Ford doesn't want a low volume, niche brand in the portfolio at the moment and they wont or can't risk the money necessary to turn Volvo into a volume luxury player. And if that is indeed the case then they probably would be better served to sell the brand for several billion dollars and invest that back into the Ford and Lincoln brands.

V10

The question on Volvo is whether it's really profitable. All those years when PAG was loosing billions of $$, Ford kept saying that Volvo was profitable. Now that the rest of PAG is gone, it doesn't appear that Volvo was really profitable in the first place.

Low volume niche brands are rarely profitable. Because of the loss of economies of scale a niche brand has to command a huge price premium over larger volume competitors. Who in their right mind would pay 20% more for a comparable Volvo over a Mercedes, BMW or Lexus?

One has to ask why the Volvo parent company sold Volvo cars to Ford in the first place. Most likely because Volvo cars was not profitable.

jsaylor

I have argued for years that Ford was artificially propping Volvo up by way of PAG, diverting profit their way through deft accounting in an effort to bolster the brand. So you'll get no argument from me here, Volvo isn't profitable and likely never has been under Ford ownership. But that lack of profitability is due to execution, not volume.

Subaru has been a profitable brand for several years now and they sell well designed cars in small volumes and do so for less than Volvo does. The issue of economies of scale really doesn't apply here either as Volvo is to FOE what Lincoln is to FNA by this point with no stand alone platforms or engines remaining for the Swedish brand. Granted, that situation is apparently morphing back into a more distinct break between Ford and Volvo, but the current reality is that Volvo should be an easy money maker and given the massive economies of scale sharing components and platform with FOE and FNA product provides costs shouldn't be an issue. But that isn't the case as we both agree.

The problem with Volvo is that Ford doesn't seem to know what they want the brand to be. To be fair it isn't all Ford's fault. Volvo had already begun to head down the road to Babylon with the S80 when Ford entered the picture. Since then Volvo's cars have hovered in a 'neither fish nor fowl' state, no longer wanting to play the role of the quirky, safety oriented, Swedish niche but unwilling to invest/risk the money to transform the brand into a full-fledged luxury brand.

Ultimately we ended up with the worst of all possible combinations, a new Volvo which builds sleek, sexy sedans meant to attract new customers but which hasn't yet figured out how to make those sedans anything but tearfully boring to drive. Life long loyalists still haven't made peace with the former and new customers, attracted by the sleek looks, often leave disappointed and without a Volvo because of the latter. The final insult? While Volvo doesn't ask for BMW or Mercedes money the difference has become small enough that the cars are regularly cross shopped, a reality which seldom ends up being beneficial for the Volvo.

There are obviously other issue, like the late acceptance of less expensive, North American or Eastern European based manufacturing facilities.....but in the end Ford obviously just doesn't know what to do with Volvo. And given this, I say sell it.

V10

Where are Subaru's manufactured.
I guarantee you that Volvo's overhead and manufacturing costs are far higher than Subaru. On top of that add in the very stong Euro vs. the artificially depressed value of the Yen and it's a very different story between Subaru and Volvo.

I do agree with your assement on the experience of driving a Volvo. I've aways thought of Volvos as cars for people who hate cars so it didn't matter to the Volvo loyalests if Volvo's driving dynamics were 30 years behind the competition. When the S80 came out it looked so nice I went and test drove one. The S80 felt like I was driving a school bus that had very nice leather seats and a good audio system.

jsaylor

I agree. But this is a problem based primarily in execution and not the Volvo brand itself which is a large part of my argument.

Exactly. The first time I drove an S80 I thought to myself 'this thing would make one heck of a Taurus'. And then it occurred to me......that probably isn't a good thing.