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It's a Small World After All- A Car Guy's Advice to China

Travis's picture





 

Ford announced today that it's going to further develop it's talks with China’s Geely Group in "more focused" negotiations to take-over the languishing Swedish automaker Volvo, a branch of Ford since they bought the brand from Volvo AB some ten years ago- for a staggering $6.45 billion in 1999 money.

Why do I say staggering?  Well, lets just say, I believe the asking price for Volvo today is much (much) less- and money, well, just isn’t worth as much as it was a decade ago.  I think, though Ford is in the best shape of all the domestics, China just may have Ford by it's "Volvos" on this one.

Some say Ford has benefitted from the Volvo relationship- having produced better, safer cars as the result.  I don’t know, have they?  

A point to note- that new 2010 Taurus (probably the future darling of the rental car business, like every Taurus before it) is based-on a Volvo platform- but whatever, some Pontiacs were based-off Holden platforms- that didn’t make them any better or worse- and people don’t care- it’s just a technicality at best.

Chrysler and Daimler-Benz shared platforms ten-ways till Tuesday, and you see how well that deal paid-off…  Chryslers still sucked, though underneath was a Mercedes-Benz which, despite opinions, is till regarded as one of the world’s most valuable brands- even if they’re “not what they used to be.”   

Many analysts say Fords are “safer because of Volvo” sure, but compared to what?  Everything, with regulations being what they are, is pretty “safe” these days, but what has Volvo gained?  A shitty at best all-wheel-drive system/SUV platform?  Go on YouTube, and watch what a Subaru wagon can do to anything all-wheel-drive Ford/Volvo has to offer. 

It’s embarrassing. 

Volvos are bland, though marketed as "safer" than most- their following here (mostly) is based-on tradition more than anything.  You know the drill- “my parents drove one…  now I will too… they’re a safer car, right?…”

But those who know cars know- it's just marketing.  (That Volvo won’t save your ass any better or worse than most anything else on the road these days, pound-for-pound; sorry, but it won’t.) 

The Volvo platforms are some of the longest-toothed in the business and personally, I wouldn't buy a Volvo, not matter who owns the company- but that’s just me.  It’s not a cutting-edged car anymore. 

Volvo, like Saab, regardless of parent or current nationality- has lost its uniqueness and what I like to refer as their “national pride” and “past edge” in actually making something different.  Thanks to GM and Ford?  Sure.   

Volvos and Saabs were great cars when they were Swedish, independent and concerned with building a solid car; not a marketing arm of Ford or GM- which may make the best cars they have in decades today, but really- to them, Volvo and Saab is just a brand with a loyal customer following. 

To the Chinese- brands like Hummer, Saab and Volvo are everything- their official bid into becoming a real-world automobile maker and player in what is a shrinking market with fewer, albeit much larger international counterparts.

Last year, Ford sold Jaguar and Land Rover brands to India's Tata Motors for about $1.7 billion; again, the only thing Ford did for these brands was take-away the electrical problems- for what was once among England's finest brands. 

Tata, from what I’ve read, is doing well with the deal- making and selling Jaguars and Range Rovers despite their “Prince of Darkness” pasts. 

Surveys have concluded- they’re doing okay, they’re putting out new models, they’ve kept it mostly British, which was better than what BMW could do with Land Rover a decade ago- remember that Anglo-Swabian marriage from hell? 

America didn’t really benefit owning the said brands.  Will the Chinese? 

Absolutely. 

But I think everyone will agree, the Chinese are getting-in on the “cheap,” as America suffers both domestically and in its automobile expansions/acquisitions of the past gone “bad.”

Maybe not “bad,” just not as profitable or beneficial as both would have hoped, neither sides really brought anything to the tables besides experience. 

And experience is exactly what China needs in the global car business, good, bad or indifferent.

But the Chinese better be careful with whatever they buy, because you know, more experienced, global automobile makers have languished with these wares in the past.

My petty advice to the Chinese?  Start racing.  Racing, believe it, or not- sells.  What competes and wins on Sunday, sells in the hearts of customers and wins the national pride of a given producing nation.

Even if the parent-owner nation is half the world away and knows little about making, designing and marketing cars on a global scale at all.

China, you better win, because nobody wants to buy a loser.  And it’s a small world after all…  It'll be even smaller if even you, China, can't make a "go" of these brands.     

 


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Wed, 10/28/2009 - 12:52 | Link to Comment fil
fil's picture

"Ford announced today that it's going to further develop it's talks with China’s Geely Group in "more focused" negotiations to take-over the languishing Swedish automaker Volvo, a branch of Ford since they bought the brand from Volvo AB some ten years ago- for a staggering $6.45 billion in 1999 money."

I'm telling ya, it's those dashboard lights. Look how colorful they celebrate New Years.

Now where's my friend from the other thread??? 

Wed, 10/28/2009 - 13:03 | Link to Comment Careless Whisper
Careless Whisper's picture

Do your homework Travis. GoldmanSachs owns 15% of Geely. Volvo gives Geely dealership distribution. They will crush the competition.

Wed, 10/28/2009 - 13:06 | Link to Comment Travis
Travis's picture

Oh, right- I forgot...  I heard Goldman too is buying a stake in Yugo in a bid to bring it back...  Car & Driver is hailing it as the next Lexus...  It'll outsell Honda in a year's time, by Goldman's own admission, of course.

Wed, 10/28/2009 - 14:12 | Link to Comment Careless Whisper
Careless Whisper's picture

GM was a big bloated bureaucracy that didn't listed to its customers. Now its a big bloated bureaucracy that is 40% owned by the governement. Geely is a lean capitalist company. It's on the Hong Knog stock exchange. GoldmanSachs now owns 15% --- of a foreign car company. Do you really think going forward a company like GM will be successful against Geely?

Check this out:

http://image.motortrend.com/f/auto-shows/2008-beijing-show-the-top-10-chinese-concepts/9713437+cr1+re0+ar1/geely-gt.jpg

 

Wed, 10/28/2009 - 13:10 | Link to Comment bpj
bpj's picture

'My petty advice to the Chinese?  Start racing.  Racing, believe it, or not- sells.  What competes and wins on Sunday, sells in the hearts of customers and wins the national pride of a given producing nation.'

 

what engine goes into Toyota's NASCAR racers?

Wed, 10/28/2009 - 13:24 | Link to Comment earnyermoney
earnyermoney's picture

They start and subsequently modify the stock V8 you find in their Tundras.

Wed, 10/28/2009 - 13:21 | Link to Comment Bam_Man
Bam_Man's picture

"Everything, with regulations being what they are, is pretty “safe” these days"

 

Not exactly. Saw a report the other day noting that the ridiculously over-hyped Tata Nano has displayed a nasty tendency to CATCH FIRE. And it does not require a rear-end collision (ala the Ford Pinto) to do so. It just spontaneously combusts.

One can only imagine what hazards await the proud new owners of a Geely.

Something tells me that neither Indian nor Chinese cars will be showing up in the US anytime soon.

Wed, 10/28/2009 - 13:26 | Link to Comment ozziindaus
ozziindaus's picture

Wanna bet? Who's going to stop it? Remember the Chinese toy and toothpaste debarkles?

Wed, 10/28/2009 - 13:32 | Link to Comment Bam_Man
Bam_Man's picture

Yeah, anything's possible.

In that case the cars will sell for $2,999 and the insurance will run you $9,999 a year.

Wed, 10/28/2009 - 14:29 | Link to Comment Careless Whisper
Careless Whisper's picture

People laughed at the Japanese cars in the 1970's. Laugh at the Chinese at you own peril. Would you rather drive a Chevy Malibu box or something like this for less:

http://carscoop.blogspot.com/2009/03/geely-to-show-updated-gt-concept-in.html

 

 

Wed, 10/28/2009 - 16:26 | Link to Comment walküre
walküre's picture

Their looks are deceiving.

Take it from someone like me who has driven Chinese cars.

Slam the doors and the wheels fall off.

They should stick to the toy manufacturing.

Just wait for the Hasbro 6000 GT which "transforms" into a ride-a-mower.

 

Wed, 10/28/2009 - 13:23 | Link to Comment ozziindaus
ozziindaus's picture

US OEM's better start building ALL their cars in China if they want to compete. This includes their flagship brands. Cars have gone the way of electronics in the sense of being a commodity. GM realized this in the early 90's and have all but abandoned NA. The trend is grim for US manufacturing thanks to Accountants, Lawyers and HR executives running the industry.  

Wed, 10/28/2009 - 14:20 | Link to Comment Slewburger
Slewburger's picture

The only thing keeping mfg of vehicles in this country is regulation.

Safety and emissions compliance is a giant liability.

You think people were pissed off about lead in toys? Wait until they're burned alive or the brake components fail on their children's school bus.

I've worked for both an automotive manufacturer and a Tier 1 supplier. And I do not know all, I just want to give you some perspective.

The scenario I see is final assembly still continues here or for what ever market the vehicle is destined for, but more and more components are made overseas.

Ford and GM required suppliers to quote prices at "Mexican" labor rates 10+ years ago....China is the new Mexico.

As far as Travis' argument "go racing"....

In this economic environment racing is a luxury, a R&D pipe dream.

What racing series actually sells vehicles? I would say on a global scale WRC.

Case in point: Subaru pulled out of WRC.....

Subaru was WRC for the last two decades.

Before that it was Audi.

From an engineering perspective, racing breeds innovation out of competitive necessity. I understand that.

But try to convince an accountant or manager that spending 1/2% off the bottom will increase the market share more than two extra colors on the vehicles brochure.

 

 

Wed, 10/28/2009 - 14:22 | Link to Comment cthulhu
cthulhu's picture

With all due respect -- "Accountants, Lawyers and HR executives"?

Are we forgetting someone? As in, Unions and the Politically connected?

When siting a plant has nothing to do with logistics and manufacturing, and everything to do with tax incentives and municipal gimmes, is it any wonder that the logistics and manufacturing quality decline? And when so much of the cost of a car is retirement pay to former workers, is it any wonder that present-day materials, labor, and overhead is shorted?

I don't see Accountants and HR executives making the cut as being a serious threat to the industry.

Wed, 10/28/2009 - 13:24 | Link to Comment Mark Beck
Mark Beck's picture

I think Jaguar should have been brought back to Great Britain with a public/private funding program. Engine development would then focus on I6 and V12 engine families, embracing the traditional Jaguar long nose profile reminiscent of the E type. Great Britain has some of the best mechanical minds in Auto racing and this technical talent could have help fine tune new engine and chassis designs.

Once the V12 was perfected I would hire an Italian coach builder to help with the body style:

Front engine body; much like the Daytona Spider and the E-Type.

Mid engine body; DeMataso Mangusta and Lotus Esprit.

High end luxury; Twin Turbo V12, body like the RR Ghost, but with more Bugatti like accents.

Wed, 10/28/2009 - 14:11 | Link to Comment Anonymous
Wed, 10/28/2009 - 13:29 | Link to Comment Anonymous
Wed, 10/28/2009 - 14:35 | Link to Comment Anonymous
Wed, 10/28/2009 - 13:30 | Link to Comment bpj
bpj's picture

Saw my friend at the Fred's Mexican Cantina in Laguna Niguel, CA yesterday and didn't see his Smart Car in the lot. ? "Whats up", and he told me he won't drive it when there is high wind warnings.

Wed, 10/28/2009 - 13:35 | Link to Comment Bam_Man
Bam_Man's picture

Wouldn't eating a big meal at Fred's Mexican Cantina take care of any "center of gravity" issues with the car? (assuming he doesn't visit the toilet until he gets home)

Wed, 10/28/2009 - 13:42 | Link to Comment Prophet of Wise
Prophet of Wise's picture

Former U.S. Car Czar Ron Bloom unveils pivotal next leg in the Obama Administration's continuing efforts to revitalize U.S. auto industry:

  http://www.rechargeonline.co.uk/1-4/info/h7248_my_first_car_info.htm

 

Wed, 10/28/2009 - 16:06 | Link to Comment Anonymous
Wed, 10/28/2009 - 22:16 | Link to Comment Anonymous
Sat, 10/31/2009 - 23:45 | Link to Comment Anonymous
Wed, 10/28/2009 - 16:17 | Link to Comment Anonymous
Wed, 10/28/2009 - 17:48 | Link to Comment Travis
Travis's picture

You sure about that?  Koenigsegg Automotive AB has a Chinese partner- BAIC.

Chinese, Swedish or not...  Volvo and Saab the cars, will never be the same, not ever again.

Thu, 10/29/2009 - 14:52 | Link to Comment Anonymous
Wed, 10/28/2009 - 16:23 | Link to Comment Anonymous
Wed, 10/28/2009 - 16:30 | Link to Comment walküre
walküre's picture

Chinese cars are designed by Hasbro toy manufacturers.

It's the same breed and mentality.

The innovation comes from Europe and North America.

How many times have you had to replace your "made in China" kitchen appliances over the last few years?

While I appreciate the brand new toaster for $19.95 or microwave for $29.95, I cannot remember my parents having had to replace their kitchen stuff every 6 months to a year.

Airbus is now manufacturing in China.

I would refuse to step on a plane "made in China".

Enough said.

 

Wed, 10/28/2009 - 17:25 | Link to Comment Anonymous
Wed, 10/28/2009 - 18:11 | Link to Comment MikeNYC
MikeNYC's picture

I drive an older (2000) V70R and love it. I've thought about what a Chinese firm would need to do with Volvo.

1. Restore the quality. Older Volvos lasted forever. Mine has a burgeoning market in replacement window switches because seemingly 100% of Volvos have a failure with this part before well 100K miles. And that's just the begining. If I bought this company, I'd hire the top two or three quality experts in the world and do whatever they say.

This is the most important thing, because once Volvo is Hyundai, or whatever the equivilent of a really shitty, or even formerly shitty, Chinese car company is, it's game over for real.

Volvo quality has slipped big time since the 240DLs everyone drove for 200K. Fix that now.

2. Do something about the parts prices. hey, it's China. This ought to be easy. Parts for these cars are crazy expensive, and others have told me they wanted one until the found out the maintenance costs.

3. Keep it as Nordic as possible. For now. This ain't the time to get all "China Pride" on running this company.

4. As Travis said, race. Volvo has a proud racing history, but it seems to have faded somewhat. Get something crazy built out there to win the WRC. Americans don't care, but the rest of the world does.

4a. Bring back the V70R. For real. Not the half-baked half-assed show-no-go R-Design. Volvo should OWN the fast wagon class, dammit, not Audi, Subaru or anybody else.

5. Acura should not be able to run those ads that say they are the only maker with all models at the highest safety level. Reclaim the safest car title, or else what's the point of buying Volvo?

It's just five things. Ought to be easy. ;-)

Oh yeah, lose the glass hatchback. The P1800ES was a beautiful car. Bringing back it's glass hatch on the coupe means something to the car designers at Volvo, but in the modern world it just looks like a Pacer revival. Who thought THAT was a good idea?

Lastly, make a shooting brake.

(not that it will help the company. I just want them to make one again.)

Thu, 10/29/2009 - 18:24 | Link to Comment sethstorm
sethstorm's picture

 

2. Do something about the parts prices. hey, it's China. This ought to be easy. Parts for these cars are crazy expensive, and others have told me they wanted one until the found out the maintenance costs.

3. Keep it as Nordic as possible. For now. This ain't the time to get all "China Pride" on running this company

----

They'll just pull a Lenovo; They'll keep it as it is now but make it into something worse at an imperceptibly slow rate.

Cheap parts do very little good when China insists on abysmally low quality. The unfortunate folks building those parts are being whipped into quantity as job 1.  That's why I avoid a Chinese built car like the plague.

 

Wed, 10/28/2009 - 21:43 | Link to Comment sethstorm
sethstorm's picture

Tata, from what I’ve read, is doing well with the deal-making and selling Jaguars and Range Rovers despite their “Prince of Darkness” pasts.

Surveys have concluded- they’re doing okay, they’re putting out new models, they’ve kept it mostly British, which was better than what BMW could do with Land Rover a decade ago- remember that Anglo-Swabian marriage from hell?

----

It is not hard for Tata to keep it mostly *British*. In spite of that, I'd bet there's a good chunk that have sworn off Tata Jaguars; that amount being more than the proverbial "acceptable loss" in customers.

As for China, the Other Major Third World Country...

China does not make cars, they make mobile coffins in the form and function of a car. It doesn't matter if there's a Western brand backing it; it only makes the Western branded car worse.

This is a case where China should and must be shut out (and done so in a more complete manner than the 1980's attempt at Japan). While that might be against some folks orthodoxy, I see them making junk well into the 22nd century.

They'd have to horribly handicap every racing league to give them any chance.

Wed, 10/28/2009 - 22:44 | Link to Comment Anonymous
Wed, 10/28/2009 - 23:12 | Link to Comment laughing_swordfish
laughing_swordfish's picture

You mention Hyundai.

I can remember when Hyundai's "quality" was such that it made the Yugo look like a step up.

The Koreans had the stones to totally revamp the product line based totally on quality - of the product and the dealership/service experience as well. Pretty much the same for Kia - their "low price" brand.

I know because I worked in marketing and QA for HNA in the early 2000's and remember the tremendous dedication these folks had to building a quality car at a fair price.

I don't know about you but I've rented a Hyundai Elantra on trips and found it to be a very reliable, driver friendly car - a plain jane version of a Toyota Corolla, but so be it.

Beat the hell out of the Dodge Caliber I rented on my last trip.

Have no plans on getting rid of either of our two paid-for cars but if one needs replacing I'd buy a 2-yr old used elantra or sonata.

 

KptLt. laughing swordfish

9er Unterseeboote Flotille

 

 

 

Thu, 10/29/2009 - 18:19 | Link to Comment sethstorm
sethstorm's picture

Question is, when will Hyundai expand their R&D to more than just a few Xerox machines, a few IP lawyers(to help with dodging parts of the law), and a few artists(who only produce at the direction of the lawyers)?  

I look at about anything from that company and ask that question.

Whether it be the Hyundai "Town and Country" Sedona, Lexus look-alike SUV's, the Buick-Mercedes Benz-Lexus chimera of the Equus, Subaru-like Forte, Civic-knockoff Koupe, or the Scion like Soul, they have made knockoffs since the beginning.  It's easy for them to do quality when they don't have to spend money designing something completely original.

No thanks, but I'll have mine American and north of the Mason-Dixon(GM).  I just won't be buying cars like the Chinese-powered Equinox or the Opel-based Buick Regal.

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