This doesn’t come as a surprise. Volvo was a money loser for Ford, and actually was an unpleasant reminder that our domestic automakers have sometimes done their worst when times were best.
Hard to remember now, but a mere eleven years ago we were rolling in dough. The United States government was regularly taking in more money than it was spending for the first time since the 1920s, and Ford was doing exceptionally well too.
You might have thought this would have meant that Ford would have plowed money into improving quality at home.
You might have thought Ford would have invested some of its profits shrewdly, to give the company a cushion against a rainy day.
Nah.
What then-Ford CEO Jacques Nasser did instead was to spend money like a cosmic drunken sailor on steroids. His goal was to assemble a stable of exotic and luxury brands all over the world. So he bought Jaguar and International Harvester and Volvo.
Ford overpaid for them and then spent billions trying to improve and fix them, and then lost billions more.
Eventually they began dumping these brands. Volvo had done better than the others, but still was a giant money-sucking hole in the corporation‘s side. Suffice it to say that Ford spent six and a half billion dollars to buy Volvo, and sold it yesterday for $1.8 billion. I like to think I could have done that without ever going to business school.
To the limited degree I understand automotive economics, selling Volvo seems like a good idea for Ford. The company, the only one of our big three not to go through bankruptcy, is overburdened with debt, and needs to concentrate on its core brands.
The new owner, Zhejiang Geely Holding Group, is led by an enthusiastic 47-year-old named Li Shufu who is widely regarded as the business whiz of China. He is pledging to keep Volvo independent, intact, and said he was committed “to preserve the distinct identity of the Volvo brand.”
Hopefully that will happen. But these events leave thousands of consumers with a dilemma. As true sons and daughters of Detroit who wanted to rally around our core industry in its hour of need, we were able to justify buying Volvos.
We bought them because they were comfortable, reliable and safe, and they were also owned by Ford. We were contributing to hometown profits by buying them, or actually, cutting their losses.
But now we no longer have that excuse. And I have another problem. I like station wagons. And I suspect I am not alone. You need a way to haul stuff around, and my vehicle of choice is a station wagon. I don’t like minivans, recreational vehicles, or any of the truck and bus-like things now sold instead of station wagons.
Volvo makes good station wagons. I have had three. I would buy a Ford Fusion wagon in a heartbeat, but they don’t make them.
Ford does make a spiffy new Focus wagon, but doesn’t plan to sell it in America. So I’d like to pose the same question to the domestic auto industry that Americans usually ask their politicians:
“What are you going to do for me?”
I love wagons too, I'd by a Mondeo wagon too or the Focus Wagon. Ford has the power to survive but we need more of what they sell in Europe, not less. Meanwhile, my Passat Wagon will have to do--and I love it.
Posted by: Donald Baxter, Iowa City | March 29, 2010 at 01:37 PM
No problem, Jack! Don't worry about that Volvo wagon. Cadillac has a Sport Wagon.
2010 Cadillac CTS Sport Wagon – about $42k:
http://www.cadillac.com/vehicles/2010/ctsSportWagon/overview.do?seo=goo_|_2008_Cadillac_Retention_|_IMG_Cadillac_CTS_Sport_Wagon_|_CTS_Sport_Wagon_|_cadillac_cts_sport_wagon&gclid=COTqtO3D3qACFQtx5QodjgvdDw
2010 Volvo XC70 Sport Wagon – about $40k:
http://www.volvocars.com/us/all-cars/volvo-xc70/pages/the-gallery.aspx
Of course, I can't help you with what you might say to The Faithful when you drive a beautiful new American-built Cadillac into the Volvo-filled parking lot in Ferndale for the next MoveOn meeting...
Posted by: Anonymous | March 29, 2010 at 02:04 PM
Faithful? Straw man arguments are great. Who do you mean by the faithful? Or is this just a normal rant you like to do when you can't find anything to spin?
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