20 July 2007

Ford's Euro-Luxury Brands

Lest we forget ... Ford Motor Co., aspiring to go upscale, bought Swedish car maker Volvo in February 1999. That was no impulse bet, either. Ford paid $6.45 billion. For purposes of comparison, Ford's profits from the preceding year, 1998, had been all of ... $6.57 billion. So the company spent nearly the whole of what it had just made just to get Volvo, such was the appeal of the brand name.

In 2001, still following that same aspiration, it folded Volvo into its newly formed "Premier Automotive Group" with two other Euro-luxury brands, Jaguar and Land Rover.

Scratch that business plan! At least two of those brands are now on the auction block. It expects to get up to $8 billion for the two UK-based operations. This would get it back about 2/3ds of what it lost in 2006.


It's possible that all of them are actually on the block: there are persistent rumors that FMC is interested in selling Volvo as well -- though the company denies them.

Is this the sound of a company, and an industry, marching bravely toward extinction? Or is it just me? At the minimum the whole 'Premier Group' thing is a failed experiment, now written off. But that experiment was in itself a bit of a last-gasp.

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Knowledge is warranted belief -- it is the body of belief that we build up because, while living in this world, we've developed good reasons for believing it. What we know, then, is what works -- and it is, necessarily, what has worked for us, each of us individually, as a first approximation. For my other blog, on the struggles for control in the corporate suites, see www.proxypartisans.blogspot.com.