On the Joys and Dangers of Being Swedish
Not that Swedes are stupid of their own volition very often. They've got Americans -- and now the Chinese -- to help them out.
I always find that one of the most telling measures of a company’s wealth is by how many really dumb mistakes it can make before it runs out of money. And General Motors, while demonstrating its own wealth with a breathtaking run of forty years of making mostly mistakes (beginning in the 1970s), remarkably still had the money and the restless energy to pick up Sweden's Saab and help usher it into an early grave. It began in the early 90s when GM bought into the company, and ended, it seems, as GM emerged from its own bankruptcy, during which process it left Saab dying by the side of the road. Only recently did GM come back to run over Saab again, when it refused to let a seemingly legit investment by a Chinese company go forward.
Sweden's other, more successful car maker, Volvo, knew the limits of its own wealth too well. On the eve of the launch of its S80 model in 1998, a car whose platform would underpin much of Volvo's future lineup, the company's Swedish owners blinked, fearing that with no margin for error they'd gamble everything and lose it all. Though they -- like the world's other smaller car makers --had been in similar straits before, they simply no longer had the stomach for risk. Demonstrating the strongly human component of automotive history, they sold Volvo to the Ford Motor Co., which was able to reap the benefits of the S80's clever engineering effort, one that would not only spin off the S60s, V70s and XC70s that formed Volvo's backbone, but also figure prominently in a whole slew of Ford's U.S. offerings, from the revised Taurus (née 500) and now-defunct Freestyle to the current Explorer and the Flex, America's most underrated people mover.
Those who suggest Ford lost money on Volvo always seem to forget that without Volvo, Ford's U.S. automobiles would have sucked for a long while way worse than they did. Like the rest of Detroit, the company had become so enamored of profits from large SUVs that it largely forgot to design passenger cars. Enter Volvo, whose S80 development work got Ford back into the game a lot quicker than it otherwise would have. That Volvo had to go ultimately was a function of Ford going broke in spite of all the canny Swedes had brought to the table. Ford said they needed to focus on the Blue Oval, which was not untrue, but mostly they needed cash badly. So Volvo was sold for $1.8 billion to China's Geely Motors. Early results for a Volvo-free Ford: going pretty well. Early results for the Ford-free Volvo: fair to partly cloudy.
It's not that Volvo doesn't make fine cars -- everything it makes ranges between good and excellent in its own way. With Geely's support, it ought to have its finances in order now, too. What seems to be lacking, from an American (its biggest export market) perspective at least, is a sufficient understanding of what Volvo is in the United States: a company that could get a premium price for its premium cars. Knowing, as the Swedes do, that Americans think Volvos are safe, is part of the Volvo marketing recipe and it is executed well. But the part that seems to be forgotten -- and this was true long before Geely took the reins -- is that Volvos were once thought to be long-lasting and, perhaps even more crucially, fuel efficient.
On the long-lasting front, it pains me (the owner of a 1967 Volvo 122S wagon), to report that every one I know who's owned a Volvo built in the early 2000s has had epic repair bills from 60,000 miles on. And the more time passes the worse it gets. I couldn't help reflecting on this on-going blow to Volvo's reputation when Tony Quiroga (of Car & Driver) and I recently detoured from a Mercedes-Benz-sponsored road test of the rocket-fast ML63 AMG, to test drive a 1969 Volvo 145 wagon for sale by the side of the road outside Santa Barbara. It looked nice and original and it drove really well, too. So imagine our surprise when we registered that it had 429,000 miles on the clock.
A reputation for uneven quality is one thing -- the towering complexity of modern automotive electronics have laid low even the vaunted Germans. And Volvo reliability, said to have improved already, can always be addressed. But what frosts my chaps about Volvo's direction is not as easily fixed. It's what can be only described as a conscious move away from embracing fuel economy. Too many Volvos get appalling gas mileage.
As a kid growing up in the 60s, I distinctly remember ads touting the 122S Volvo's 25 mile-per-gallon economy. This at a time when much smaller VW Beetles, the perceived gold standard in green automobiles at the time, delivered around the same. I remember it well because my early adopting parents bought a 122S wagon new--and fuel economy was part of the package that impressed these aspiring middle classers. It was a car that was safe, promised to last a long time, was not a slave to fashion (in those days of chrome overdoses and annual model changes) and got good mileage. This is why they spent the big bucks ($2800 in November, 1966) to buy a Volvo.
The formula for Volvo's success today will be necessarily somewhat different. Annual model changes have long since been relegated to the dumpster of history and, truth to tell, all cars are light years safer than they ever were. But fuel economy remains an issue, and with premium buyers, given society's increasing understanding of global warming, more so than ever. Economy is no longer just an ethical posture shared by liberals and puritans, or a flinty cheapskate's fascination with saving money. Today global warming is perceived by the classic Volvo buyer -- conjure in your mind the educated, anti-materialist materialist, college professor -- as an existential threat. Hence, my gripe with some of Volvo's recent marketing decisions, in which the company chooses to deny America its most fuel-efficient offerings, while embracing this country's tendency to excess.
They're Killing Wagons
To scan the roads where I live outside of New York City you'd think every 10th car is a Volvo wagon, making the company's decision last year to wind down the sale of wagons in America, in favor of selling more heavyweight crossovers, about as logical as Kraft deleting its cheddar cheese offerings because more people like Velveeta. Guys, for many of your former core audience and for many who could and would be your customers but won't, I mention that a crossover -- higher, heavier, uglier, no more practical -- is not an acceptable substitute. We don't like Velveeta, never will.
They Smothered the C30 with Neglect
There's no reason people won't buy premium-priced small cars, at least when the quality and technical interest justify the premium. The C30 model is still on sale, but it's treated like a loathed stepchild, with high prices and little in the way of marketing support (few ads, no sub-vented lease prices). Which is a shame because it's a great car, a four-seat hatchback of unusual style (indeed, it's about the prettiest small car out there) and not inconsiderable practicality, owing to a pair of "for real" back seats. But like the S40 and V50 wagon models to which it is closely related, the C30 appears to be of little interest to the company and it's been left to die on the vine, too expensive and…
Where’s the Mileage?
The C30, like the S40 and now defunct V50, too, is saddled with a bibulous five-cylinder turbo motor that is often hard-pressed to squeeze 20 miles out of a gallon, an absurd state of affairs if it were a performance model, but that is not its strong suit either. So bring on the smaller engine or turbo-diesel that will make this a 30- or 35-mpg car and watch it show up on many more consideration lists. The higher prices you might need to charge will be more than offset by the people who will suddenly become interested in this car. Ditto all Volvo's other cars -- 15 mpg overall mileage on a recent day spent in an XC60, an otherwise pleasant machine, was not inspiring.
They’re Not Doing It the Volvo Way
While there is clearly a market for big thirsty Volvos (take a bow V8-powered XC90 crossover), by failing to offer truly efficient machines in America, the company transgresses against the truest meaning of its identity, what made the brand -- and the owners of its cars -- feel special. I don't begrudge the buyers of lousy mileage Volvos their purchases -- it's a free country -- but for Volvo to say, "That's where the market is, so that's what we must do to make money," is wrong factually. (It's where part of the market is, not, however, the market you once owned) And it's wrong morally. There's money, for instance, to be made selling illegal prescription drugs to teenagers; it doesn't mean you ought to be doing it. Yes, some Americans are all “bigger equals better,” but some aren't. This market is diverse, not monolithic, as Volvo found out fifty years ago, when its cars flew in the face of the gas-guzzling dinosaurs and won, on its own terms. On that count, nothing's changed about the American market.
Bringing It All Home in a Single Big Mistake
Tying all these negative trends together is easily the most depressing news we've heard from Volvo in years, including its decision not to sell in America its new diesel/hybrid V60 wagon, sister car to the excellent but too thirsty S60 that it does sell here. A Volvo that gets 50 miles per gallon and more, that's a hybrid (sounds chic) and a wagon? That's a no-brainer in many of the affluent communities where people are now looking elsewhere for cars with same price tickets that Volvo would have to charge for its product. When something is cooler than the competition, people -- affluent, educated, green people -- will pay more. The streets of suburban New York would be thick with them.
Think for Yourself
Crossovers instead of wagons, bigger engines instead of smaller ones, where Volvo once marched to the techno beat of its own Swedish drum machine, it now seems content to reflexively follow the accepted wisdom of the pack. This, in itself, is a central breach of the marketing posture and promise that once set Volvo apart.
Volvo's new Chinese ownership is reportedly anxious to take the Swedish company upmarket, which is understandable -- that's where the bigger profits live. And it's hard to argue with profits. But someone tell Geely -- maker of the famous-in-China Gleagle, Emgrand and Shanghai Emgland brands -- that upmarket in the 21st-century West isn't just bigger cars, it's better ones. Volvo knows how to build them, too.
There is a great, unique place for Volvo in our world, it just needs to reclaim it. Anything else would be stupid.