Volvo CEO Seeks Lost Customer Niche
10-06-08, 10:41 AM
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Volvo CEO Seeks Lost Customer Niche
Volvo CEO Seeks Lost Customer Niche
By Jeff Bennett
6 October 2008
The Wall Street Journal
(Copyright (c) 2008, Dow Jones & Company, Inc.)
Volvo Cars, once a Swedish luxury-car powerhouse, has become little more than Ford Motor Co.'s problem child.
Posting losses and losing market share, Volvo had appeared destined for the auction block as Ford moved quickly to shed its other European luxury brands. But Ford Chief Executive Alan Mulally decided last year to keep the company and find a way to restore its lackluster image.
Enter Stephen Odell. Handpicked by Mr. Mulally earlier this year to be chief executive of Volvo, the former European chief operating officer for Ford is attempting to take the company back to the basics in order to find its lost customer niche.
"I don't want Volvo to be a copycat, luxury European car maker; there are too many of those," Mr. Odell said in an interview at the Paris Motor Show. It was his second day as CEO.
"We are in a rapidly changing world, and I think the world may be turning to Volvo's values of subtle luxury, safety and the environment," Mr. Odell said. "I think overt consumerism is waning and people want subtle luxury rather than a badge or a car that says, 'Look at me.'"
Volvo posted a first-half loss of $247 million and has been forced to cut jobs and production amid a global slowdown in luxury-car purchases, especially in the U.S., where a softening economy has kept shoppers away from dealerships.
"Volvo lost its voice in the market because it became so crowded, and their designs became nondescript instead of understated," said Global Insight analyst Rebecca Lindland.
As Mr. Odell deals with reviving designs, he must also contend with ongoing speculation that Ford, which posted a second-quarter loss of $8.7 billion as it struggled to revive its North American business, could still opt to sell the Gothenburg, Sweden, company.
"The question of ownership is interesting and worrying, but the question of being sustainable and profitable is a bigger question," Mr. Odell said. "If you get to the point where you are profitable you can offer Ford other choices and better choices than they have today. My case isn't to come here and sell it, it is about improving the business."
Volvo is in the midst of cutting 2,000 workers and has accelerated a plan to cut a shift at one of its plants this month instead of December. Volvo has also announced that it will cut another 900 workers next year. Mr. Odell said he doesn't know if the cutting will end there. "It is really tough to predict where this industry is going to go," he said. "I hear industry sales predictions that range between 13 million and 15 million, both in North America and Europe, so pick your poison.
"We are trying to determine if we are the right size yet and I already have people working on determining that," he added. "My guess is that if we are planning to make any announcements they will come before the end of October."
Mr. Odell, 53 years old, succeeded Fredrik Arp, who had been Volvo's CEO for three years. When the management shift was announced last month, Mr. Odell reiterated Ford's previously announced plans to make Volvo more of a stand-alone unit within Ford, while leveraging product development and savings in purchasing with other Ford operations.
Mr. Odell won't discuss Volvo's past missteps, although he said he is no longer giving sales-volume forecasts.
"One of the mistakes they probably made was to start quoting huge sales-volume numbers," Mr. Odell said. "Let's get the business right and the volume will be part of that. I am not going to put stakes in the ground saying that we must sell a million cars by a certain time period."
Mr. Odell, who took over as Ford's Europe operating chief in April, served as Ford of Europe's vice president of marketing, sales and service for nearly three years. He held several senior positions at Mazda Motor Corp. from 2000 to 2005 and was vice president of marketing and sales for Jaguar of North America from 1997 to 2000. He is also the first non-Swede to lead the company.
"I am not going to say that being the first non-Swede doesn't matter," Mr. Odell said. "What I have to do to overcome the hurdles is be an aggressive listener, which means you wait to speak. . . . I don't expect to be accepted overnight, but over time I think I will."
License this article from Dow Jones Reprint Service
By Jeff Bennett
6 October 2008
The Wall Street Journal
(Copyright (c) 2008, Dow Jones & Company, Inc.)
Volvo Cars, once a Swedish luxury-car powerhouse, has become little more than Ford Motor Co.'s problem child.
Posting losses and losing market share, Volvo had appeared destined for the auction block as Ford moved quickly to shed its other European luxury brands. But Ford Chief Executive Alan Mulally decided last year to keep the company and find a way to restore its lackluster image.
Enter Stephen Odell. Handpicked by Mr. Mulally earlier this year to be chief executive of Volvo, the former European chief operating officer for Ford is attempting to take the company back to the basics in order to find its lost customer niche.
"I don't want Volvo to be a copycat, luxury European car maker; there are too many of those," Mr. Odell said in an interview at the Paris Motor Show. It was his second day as CEO.
"We are in a rapidly changing world, and I think the world may be turning to Volvo's values of subtle luxury, safety and the environment," Mr. Odell said. "I think overt consumerism is waning and people want subtle luxury rather than a badge or a car that says, 'Look at me.'"
Volvo posted a first-half loss of $247 million and has been forced to cut jobs and production amid a global slowdown in luxury-car purchases, especially in the U.S., where a softening economy has kept shoppers away from dealerships.
"Volvo lost its voice in the market because it became so crowded, and their designs became nondescript instead of understated," said Global Insight analyst Rebecca Lindland.
As Mr. Odell deals with reviving designs, he must also contend with ongoing speculation that Ford, which posted a second-quarter loss of $8.7 billion as it struggled to revive its North American business, could still opt to sell the Gothenburg, Sweden, company.
"The question of ownership is interesting and worrying, but the question of being sustainable and profitable is a bigger question," Mr. Odell said. "If you get to the point where you are profitable you can offer Ford other choices and better choices than they have today. My case isn't to come here and sell it, it is about improving the business."
Volvo is in the midst of cutting 2,000 workers and has accelerated a plan to cut a shift at one of its plants this month instead of December. Volvo has also announced that it will cut another 900 workers next year. Mr. Odell said he doesn't know if the cutting will end there. "It is really tough to predict where this industry is going to go," he said. "I hear industry sales predictions that range between 13 million and 15 million, both in North America and Europe, so pick your poison.
"We are trying to determine if we are the right size yet and I already have people working on determining that," he added. "My guess is that if we are planning to make any announcements they will come before the end of October."
Mr. Odell, 53 years old, succeeded Fredrik Arp, who had been Volvo's CEO for three years. When the management shift was announced last month, Mr. Odell reiterated Ford's previously announced plans to make Volvo more of a stand-alone unit within Ford, while leveraging product development and savings in purchasing with other Ford operations.
Mr. Odell won't discuss Volvo's past missteps, although he said he is no longer giving sales-volume forecasts.
"One of the mistakes they probably made was to start quoting huge sales-volume numbers," Mr. Odell said. "Let's get the business right and the volume will be part of that. I am not going to put stakes in the ground saying that we must sell a million cars by a certain time period."
Mr. Odell, who took over as Ford's Europe operating chief in April, served as Ford of Europe's vice president of marketing, sales and service for nearly three years. He held several senior positions at Mazda Motor Corp. from 2000 to 2005 and was vice president of marketing and sales for Jaguar of North America from 1997 to 2000. He is also the first non-Swede to lead the company.
"I am not going to say that being the first non-Swede doesn't matter," Mr. Odell said. "What I have to do to overcome the hurdles is be an aggressive listener, which means you wait to speak. . . . I don't expect to be accepted overnight, but over time I think I will."
License this article from Dow Jones Reprint Service
10-06-08, 01:11 PM
#2
Lexus Fanatic
Volvo's problem is not because of so-called "image" or its past buisness practices..........that's where Odell and Mulally have it wrong. Its U.S-market lineup, with the possible exception of the C30, has little to offer besides rock-solid safety features and crash resistance, where they rank with Mercedes at the top of the industry. But their products, except for the C30, tend to drive, handle, and steer like appliances, with little feel in the steering or chassis. The S80 I reviewed a couple of years ago felt like a motorized cocoon; you could tell virtually no difference in the three push-button suspension settings, and the steering had more novicane in it than a dentist's office. It was less of a drivers' car than the average Buick. Great for safety advocates.....not-so-great for those who like to drive. And the Grandpa-like driving characteristics and so-so handling don't even translate into a particularly smooth ride.....most Volvos tend to ride rather firmly as well.
Last edited by mmarshall; 10-06-08 at 01:14 PM.
10-06-08, 11:27 PM
#3
Lexus Test Driver
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With all due respect, the same could be said of any Lexus compared to a German foe. I don't think it's about the lack of driving dynamics (Lexus is righttt up there), it's more that the entire package is just so vanilla. A general Lexus doesn't have the "feel" of a BMW, or even a Honda, but they do have the Lexus brand-awareness, at least in the US. The Volvo drives, looks, and is precieved to be an appliance. They need to transform their brand identity into something else. Whether that calls for more radical designs or improved driving dynamics is up in the air.
10-07-08, 04:56 AM
#4
Lexus Fanatic
Driving dynamics, yes, I agree, but it depends on what you mean by "radical" designs. You don't want your vehicles to end up looking like something out of Star Wars. And trying something "different" in styling can often bring problems......witness Pontiac's Aztek, the new BMW X6, and the grilles on newer Audis and Acuras....all have taken their share of panning in the auto press.
10-07-08, 07:09 AM
#5
Instructor
IMHO there is nothing appealing about Volvos. They look plain, they are not luxurious, they are unreliable, and they are somewhat expensive. I have always wondered why anyone would want to buy a Volvo. 
10-07-08, 09:05 PM
#6
I had a 95 850R wagon (pre Ford) and it was a really nice car in its day.
The real issue with it was stupid costly repairs. Not the kind that kept the car off the road but ones that kept you going back to the shop and wondering why.
Ford was able to use the 850 platform some and that was fine.
The business problem was they stuck with the transverse front engine plan while folks like Nissan got the nicer front/rear platform (like in the g35) going.
They also Fordified the product. That is, the nice build features like woodwork were replaced with genuine Ford fake wood. The center consoles had that generic matte plastic look too.
Then on to electronics. We are all digging the cool content available these days. When everyone was doing projector xenons, Volvo was late to the party and then came with cheesy reflector ones. The nav on the s60R I tried was no great shakes plus you could hardly see it where it popped up from the dash. They made and exec sedan with this pathetic little video monitor that sat low between the two rear seats. Another ding a ling idea.
For interiors, the seats stayed tip top but they actually let some put orange carpets in a production car.
Also, while Volvo was busy making wagons that looked like Subaru Outbacks, Acura was taking all the s60 customers with the TL.
At this point, the only car that is up to date is the c30. I can count on one hand the number of those I have seen in Chicago so even that must be selling poorly. I would give the c70 vert more credit but front wheel drive convertibles don't do it for me.
The real issue with it was stupid costly repairs. Not the kind that kept the car off the road but ones that kept you going back to the shop and wondering why.
Ford was able to use the 850 platform some and that was fine.
The business problem was they stuck with the transverse front engine plan while folks like Nissan got the nicer front/rear platform (like in the g35) going.
They also Fordified the product. That is, the nice build features like woodwork were replaced with genuine Ford fake wood. The center consoles had that generic matte plastic look too.
Then on to electronics. We are all digging the cool content available these days. When everyone was doing projector xenons, Volvo was late to the party and then came with cheesy reflector ones. The nav on the s60R I tried was no great shakes plus you could hardly see it where it popped up from the dash. They made and exec sedan with this pathetic little video monitor that sat low between the two rear seats. Another ding a ling idea.
For interiors, the seats stayed tip top but they actually let some put orange carpets in a production car.
Also, while Volvo was busy making wagons that looked like Subaru Outbacks, Acura was taking all the s60 customers with the TL.
At this point, the only car that is up to date is the c30. I can count on one hand the number of those I have seen in Chicago so even that must be selling poorly. I would give the c70 vert more credit but front wheel drive convertibles don't do it for me.
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