Volvo: Profitable in US?

[Sills]

I've heard that despite Ford's financial problems, Volvo is their "cash
cow" in the US. Is this true? Does the Volvo brand make money in the US or
are they losing their butts like, for example, Volkswagen?

 

[Jamie]

I can't answer that question, but you very much surprised me saying VW
was losing money. I wouldn't want to steer off topic, but could you
briefly elaborate as to why VW would be losing money?

I understand GM's reasons as well as Ford's -- as far as unions and
health care and pensions go. Not to mention good trucks and some crappy
cars (not all). But the Japanese are mopping up with superb quality and
kicking butt. VW and German cars have a very solid reputation and are a
great product. How/why would they be losing money?

 

[Sills]

I agree that VW's are great, but Consumer Reports doesn't think so. I've
been a VW guy for 40 years, but since 2001, their US Sales plummeted by
37%. Finally, now, in 2006, sales are going back up. In Germany, they also
have Labor Unions, and for some reason, it costs them 1/3 more than other
automakers to produce a car. With the exchange rates of the Euro vs the
Dollar and the German Labor unions, VWAG has lost nearly 3 billion dollars
here since 2004. Fortunately, the profits in Europe and elsewhere have
offset that. VWAG is trying to restructure, but they don't believe they
can be profitable here in America until 2008 or so, and THAT's only if
they stay on the current track. I love VW, and want them to remain here,
but in case something happens, I'm exploring Volvo.

 

[Darby OGill]

....I know the thread has drifted ot but I wanted to say that, in talking to
a few recent VW owners, they were quite dissatisfied with quality. Seems the
cars run and drive just great, but all sorts of body hardware and other
secondary stuff breaks......I had a VW fox, a '91. Maybe not pertinent to
todays situation, but that brazilian made car handled just great, and the
1.8 engine was bullet proof......but the drivers seat back broke and so did
three of the four outside door handles, drivers door included...made me mad.

 

[Peter Ziobrzynski]

I don't think we drifted at all. I think the main case here is why so
many of great classic brands like Volvo, SAAB or VW allowed to make such
radical changes in their manufacturing, design or management that they
turn off the majority of their so far loyal customers:

- Volvo group allowed Ford to take over their cars in 1999. Since then
the quality of components used is just awful (throttle, sensors, bulbs,
etc. etc.)
- SAAB taken over by GM is in the same category (I know - my other car
is 9/3 Viggen)
- VW moved the manufacturing to Mexico and problems started since then.
I drove 97 VR6 to over 120k miles with no issues at all only because it
was original from Volksburg.

I hope that they will all finally learn the lesson and figure out that
good complex product is a sum of good design and technical culture that
usually is specific to a nation and cannot be exported or outsourced.

-Peter

 

[M.R.S.]

I don't think we drifted at all. I think the main case here is why so many
of great classic brands like Volvo, SAAB or VW allowed to make such radical
changes in their manufacturing, design or management that they turn off the
majority of their so far loyal customers:

- Volvo group allowed Ford to take over their cars in 1999. Since then the
quality of components used is just awful (throttle, sensors, bulbs, etc.
etc.)
- SAAB taken over by GM is in the same category (I know - my other car is
9/3 Viggen)
- VW moved the manufacturing to Mexico and problems started since then.
I drove 97 VR6 to over 120k miles with no issues at all only because it
was original from Volksburg.

I hope that they will all finally learn the lesson and figure out that
good complex product is a sum of good design and technical culture that
usually is specific to a nation and cannot be exported or outsourced.

-Peter

Volvo didn't "allow" Ford to take it over, Volvo was up for sale, and there
were many suitors, including Fiat...

Fiat owns Ferrari, Maserati, Alfa Romeo and Lancia...

Does that mean Maserati cars are crap because Fiat owns them? Are Ferraris
worse off cuz Alfa Romeo is in their family?

Ford and Volvo are TWO very different car companies. The ONLY car that is
currently based on a joint platform is the S40/V50 - Mazda/Ford/Volvo... I
don't know about the XC90.

The S60 was engineered far before Ford owned them, it generally takes 4
years max for a car to come to market, depending on the level of engineering
and if it's a completely new design or just a redesign.

The Saab 93 Viggen is more Saab than GM, period. The Ecotec is a world
engine, period. Yes, it is in the Cobalt, and yes, it's in the Opel, yes,
it's probably in Holdens as well...



You're quite far off the mark in vehicle comparisons. I don't think you can
find a Saab component in the typical GM parts bin on ANY other car (the
engine is unique to the Saab, turbo, layout, etc..),

Hmmm, Daimler owns Chrysler.. so what, the 300C is a good car cuz it has
Mercedes components throughout? It's a good car cuz it was well engineered.



When I think of Volvo, I don't think of Ford... I think of a great car that
has little or nothing to do with Ford except owenership (no parts bin).

 

[seog]

I can't answer that question, but you very much surprised me saying VW
was losing money. I wouldn't want to steer off topic, but could you
briefly elaborate as to why VW would be losing money?

I understand GM's reasons as well as Ford's -- as far as unions and
health care and pensions go. Not to mention good trucks and some crappy
cars (not all). But the Japanese are mopping up with superb quality and
kicking butt. VW and German cars have a very solid reputation and are a
great product. How/why would they be losing money?

Solid reputation? According to whom? Euro cars esp. MB & VW have abysmal
reliability.

 

[Jamie]

Peter,
You make great points on the "parts" parts of the cars. If I were to
play devil's advocate - just to counter a point, it would be this.
While the materials and possibly the engineering may remain unique with
respect to the Ford/Volvos and GM/Saabs, what bothers me is that now
you have the Ford way of thinking leading the way for Volvo and the GM
way of thinking leading Saab. This is not to say that either the Ford
or GM way of thinking is bad, but rather for me it makes me think, "OK,
if Ford owns Volvo - what kind of shape are they in?" If Ford's way of
doing business thus far has been unsuccessful, I ask myself how can
this improve Volvo?" Sure, if Volvo has a money issue and needs a buyer
just to stay alive, that's another issue.

Same with GMC.

Think about it this way, if BMW bought Ford, I would say, "wow" - now
Ford is going to maybe ascend toward BMW quality. If Ford bought BMW,
I would say, "darn", now the ultimate driving maching is going to be
"Ford tough."

Probably more a mental mindset for me, but that's my 2 cents.

 

[Howard Nelson]

Peter,
You make great points on the "parts" parts of the cars. If I were to
play devil's advocate - just to counter a point, it would be this.
While the materials and possibly the engineering may remain unique with
respect to the Ford/Volvos and GM/Saabs, what bothers me is that now
you have the Ford way of thinking leading the way for Volvo and the GM
way of thinking leading Saab. This is not to say that either the Ford
or GM way of thinking is bad, but rather for me it makes me think, "OK,
if Ford owns Volvo - what kind of shape are they in?" If Ford's way of
doing business thus far has been unsuccessful, I ask myself how can
this improve Volvo?" Sure, if Volvo has a money issue and needs a buyer
just to stay alive, that's another issue.

Same with GMC.

Think about it this way, if BMW bought Ford, I would say, "wow" - now
Ford is going to maybe ascend toward BMW quality. If Ford bought BMW,
I would say, "darn", now the ultimate driving maching is going to be
"Ford tough."

Probably more a mental mindset for me, but that's my 2 cents.

Or the way I have summarized it in the past:

DaimlerChrysler Mercedes styling combined with Chrysler engineering

Howard

 

[Peter Ziobrzynski]

M.R.S. wrote:
....

You're quite far off the mark in vehicle comparisons. I don't think you can
find a Saab component in the typical GM parts bin on ANY other car (the
engine is unique to the Saab, turbo, layout, etc..),

MRS - I don't think you read my article correctly. It was NOT about
technical comparisons - it was about the strategic management decisions
car manufacturers make these days and their dismal results.
So far what I see is that 3 great european brands do everything to be
completely outrun by Japanese. American brands where never in the race IMHO.

BTW - my "world class" SAAB Viggen engine with GM parts in it broke
balancing chain after 50k miles cracking the small block, etc. Dealer
repair cost $10,000. - few hundred miles after GM warranty.

-Peter

 

[Stephen Henning]

Solid reputation? According to whom? Euro cars esp. MB & VW have abysmal
reliability.

Actually the only Euro cars with abysmal records are the Jag, Benz,
Saab, BMW,and Audi. The VW has not had the distinction, nor have the
Land Rover, Porsche, and Volvo.

There are many Japanese brands that are not in the most reliable column
such as Acura, Infinity, Isuzu, Mazda, Misubishi, Nissan, Subaru and
Suzuki. So buying a Japanese brand is not a guarantee of reliability.

Here are lists from the largest automotive reliability surveys:

Most Reliable Models:

Toyota Echo, Toyota Prius, Toyota Corolla, Lexus IS300 (2005), Toyota
Camry, Honda Accord 4-cyl., Lexus LS430.

Least Reliable Models:

Chevrolet Cobalt, Jaguar S-Type, Lincoln LS, Mercedes-Benz E-Class, Saab
9-3, Mercedes-Benz S-Class, BMW 5 Series (V8), Audi A8, Chrysler 300
(V8), BMW 7 Series.

Volvo doesn't make either list. It should be noted that these lists are
the results of reliability in the first 5 or so years. It does not
reflect on long term reliability. There are some makes that have a few
early problems but then last forever. I think Volvo is one of those. My
11 year old Volvo had very few problems and is still like new.

Then there are others that are reliable when new but then go to pot. I
know that Subaru is one of those. My 11 year old Subaru had a long list
of problems before it was condemned by State Inspectors because it
rusted out, even the brake mechanisms rusted. Many parts were replaced
because of rust including the complete tail gate, but the basic
structures of the car were also fatally compromised and this car was
kept in a garage and had dealer service.

Regarding profitability, Ford is trying to use the safety record of the
Volvo Brand to make its other brands more profitable. Every Ford brand
is sold as having safety backed by Volvo Engineers. It is hard to put
such brand carryover into the profit margin.

 

[Stephen Henning]

Mercedes styling combined with Chrysler engineering

Both Benz (E-class and S-class) and Chrysler (300 V8) make the least
reliable cars. But so does Lincoln (LS). I hope this doesn't reflect
on Volvo.

 

[M.R.S.]

M.R.S. wrote:
...

MRS - I don't think you read my article correctly. It was NOT about
technical comparisons - it was about the strategic management decisions
car manufacturers make these days and their dismal results.
So far what I see is that 3 great european brands do everything to be
completely outrun by Japanese. American brands where never in the race
IMHO.

BTW - my "world class" SAAB Viggen engine with GM parts in it broke
balancing chain after 50k miles cracking the small block, etc. Dealer
repair cost $10,000. - few hundred miles after GM warranty.

-Peter

cracking the small block??

You mean the bottom end... a small block is a North American reference to
V-8 engine size (small block, big block).

You may mean "short" block, which is still not a valid reference, since a
short block is typically a reference to a state of a motor build, ie: short
block has pistons, rods, bearings, no cylinder head.


Ford learns more from Volvo than what flows the other way.

Volvo is still a stand alone company. Now, when I see some Jaguars, I see
Ford Taurus.. that's a different story.

 

[Sills]

What I find intersting is that the Ford Fusion/Mercury Milan siblings have
scored poorly in offset crash tests, so Volvo's influence of safety must
have been overlooked, at least with these particular models. Nevertheless,
the original question, which still hasn't been answered, is: Does Volvo
make or lose money in the US market?

 

[Stephen Henning]

What I find intersting is that the Ford Fusion/Mercury Milan siblings have
scored poorly in offset crash tests, so Volvo's influence of safety must
have been overlooked, at least with these particular models.

That is because they introduced it before the testing. It will now have
the side curtains which make it acceptable standard rather than
optional. This is an improvement at Ford. It goes along with the
corporate image it tried to buy when it bought Volvo Cars.

 

[M.R.S.]

That is because they introduced it before the testing. It will now have
the side curtains which make it acceptable standard rather than
optional. This is an improvement at Ford. It goes along with the
corporate image it tried to buy when it bought Volvo Cars.
--
Cheers, Steve Henning in Reading, PA, USA
Owned '67,'68,'71,'74,'79,'81,'87,'93,'95 & '01 Volvos.
The '67,'74,'79,'87,'95 and '01 through European Delivery.
http://home.earthlink.net/~rhodyman/volvo.html

Trust me, the cars did get crash tested before they were introduced (by
Ford)...

It's all done by computer simulation.

However, IIHS does different testing at different levels. These are not
mandatory to follow, they just look good for the insurance regulators.

If you do some reading into IIHS, pretty much NONE of the cars do very well
(Volvo is the exception), and thus, your rates are higher.

 

[Aawara Chowdhury]

In <[email protected]>,

What I find intersting is that the Ford Fusion/Mercury Milan siblings have
scored poorly in offset crash tests, so Volvo's influence of safety must
have been overlooked, at least with these particular models.

The Fusion is based on the Mazda 6, not any Volvo platform. But that's
still puzzling because the Mazda 6 has pretty good safety ratings.

Nevertheless,
the original question, which still hasn't been answered, is: Does Volvo
make or lose money in the US market?

Last time I saw numbers (2004), Volvo made money in the US market.

AC

 

[zencraps]

Amazing to recall that when Ford bought Volvo's automobile operation
for a bit over six billion in 1999, Ford was America's most profitable
car manufacturer.

Not anymore.

Volvo, the company still exists in Sweden, but they build trucks and
are raking in the money.

In contrast, "Fjord" has seen a massive diminishment of profits.

 

[NeedforSwede2]

Actually the only Euro cars with abysmal records are the Jag, Benz,
Saab, BMW,and Audi.

Saabs still have fanastic reliability. It just isn't as good as it was
Pre-GM. Still better than most though.

 

[M.R.S.]

Saabs still have fanastic reliability. It just isn't as good as it was
Pre-GM. Still better than most though.

Maybe.. but GM has nothing to do with wheter Saab is reliable or not.

GM owned a bit of Fiat, did that make Fiats any more UNreliable??? ...
heheheh, Fiats were reliable, they just rusted before the warranty ended.