by "LJ909" (lj909)
Published 08/16/2017 at 13:47
by "LJ909" (lj909)
Published 08/16/2017 at 13:47
No Tags
STARS: 7
The building you see above was once the North American headquarters of Ford Premier Automotive Group in Irvine California (its now Taco Bell’s headquarters, or I think it used to be). The brainchild of Ford CEO Jacques Nasser it was, in a sense, useless empire building. It included Lincoln, (for some reason) Mercury, Aston Martin, Jaguar, Land Rover, and Volvo. Where did it go wrong?
Dreamed up in ‘ 96 but coming to fruition in ‘99 , Nasser had big dreams for PAG as it became known in some circles. He set lofty goals across the board for PAG:
A million vehicles a year 10 years out and 80% of the company’s entire profit
He wanted Volvo selling 650k a year.
Jaguar, with the help of the then new X Type, would be pushing 800k a year.
But none of that happened and it was a shitshow early on, almost from inception. Nasser left in ‘ 01 . By October of that year, Ford had already pulled Lincoln and Mercury out from under PAG citing internal confusion of the marques. To make matters worse, Ford’s ambitious plans for Jaguar never saw the light of day because of falling sales and Detroit having to leverage the failing company financially.
Internally, Ford pushed for the brands to work together, which was the whole point of PAG to begin with. But with different dealer networks, synergies off and each brand having their own unique market, things were hard. Its one of the reasons the X Type failed (more on that in another write up.). The car was too “mass market” for some because of its Mondeo underpinnings.
There was sharing though, but not to much success. The DEW 98 platform was shared with the Thunderbird, Jaguar XF and Lincoln LS, which also used Jaguar V6 and V8 engines. Aston Martin got a piece from everyone including random things like Jaguar V8's, Volvo keys and sound systems etc. Apparently the first gen Navigator and LS were heavily influenced by Jaguar designs, though I’ve never seen where.
Ultimately, PAG was a failure all around, with nothing coming out of it being successful. Jag’s supposed game changers the S and X types were terrible, and some have said that Ford actually made Volvo worse. Professor Garel Rhys of Cardiff Business School said of Ford’s failure with Volvo :
Volvo used to be a mass-market car with a bit of attitude. Ford pushed the price up to compete with BMW and then increased production; they undermined their own market penetration. It was bizarre, they wanted higher prices and more sales, there’s no demand curve on earth that follows that path, especially in a recession.”
They actually lost market share after Ford bought them. Its been said that at times Volvo was sort of the odd man out in the group, being a part of it but not at the same time. You can MAYBE find a few parts here and there in some used PAG vehicles from that era, but the last thing still being produced from PAG is the XF, which is long in the tooth.
By 2004, Ford has spent $17 billion on this experiment. Just 2 short years later, after Alan Mulally came on board, Ford began dismantling PAG. Aston was first to go being sold to an invesment consodriom headed by Prodrive chariman David Richards. They bought it for $925 million.
Tata bought Jaguar Land Rover for $2.3 Billion in 2008 and hasn’t been the same since. Its seemed like they needed to be left to do their own thing and its been working.
Volvo was the last hold out. Ford sold Volvo to Geely in ‘ 10 for $1.8 billion. Sometiems its semeed as though they never got their groove back after Ford went through them.
We all know the fate of Mercury, but some have blamed the dumpster fire that was PAG as the reason for Lincolns struggles since forever it seems.
Could PAG have worked better in the right conditions? Maybe. One has to just look at how VAG built their castle with some of, if not most of the worlds most storied brands. And for the most part it worked for them. But where do you guys think the Premier Automotive Group went wrong? Was it the product? Or the management?
"William Byrd" (thedriver)
08/16/2017 at 14:04, STARS: 1
That’s good stuff! Are you writing for anyone currently?
"His Stigness" (HisStigness)
08/16/2017 at 14:04, STARS: 1
Even Ford had managed PAG properly I don’t see how it ever would have succeeded in creating synergies or successfully lowering costs. Even if you take Ford marquees out of it (as they did) the brands left didn’t share enough in common and had totally different clients.
The only way it could have thrived was if Ford had a completely hands off approach, but that’s not how automotive brands work, and you have to spread development costs out, and Ford would have diluted those brands by forcing them to share with Ford cars. As you said Jaguar and Volvo both suffered under Ford and it would have only gotten worse.
"KusabiSensei - Captain of the Toronto Maple Leafs" (kusabisensei)
08/16/2017 at 14:06, STARS: 3
Ford’s management wasn’t exactly sound under Nasser. PAG was a complete cluster from the word “Go.”
The best parts of that whole thing were 1) Aston Martin getting access to Ford’s global parts bin (Volvo keys and such) and 2) Ford getting more use of the AJ-V8 engine.
But we knew that already.
Volvo was screwed for the reasons that you state. Ford wanted a Swedish Mercedes that printed profits. But they shot through the price increases and that left far fewer of the core customer base of Volvo being able to afford a new Volvo.
They also wanted Land Rover, moreso than Jaguar. Jaguar needed a wakeup call, and Ford gave them that back in the 1980s under Bill Hayden. Land Rover (which was the acquisition of Rover from BMW, who had also wanted the Land Rover SUVs, along with a few plants to produce Minis and expand their product line) was to be another way for Ford to expand their own product line (by having more capable vehicles off road rather than the current crop of soft roaders).
But nothing really synergized, since it takes a lot of effort to get disparate groups to work together under common ownership. Basically, Volvo saw itself as Volvo, Jaguar as Jaguar, etc, and not as members of Ford.
The sale of JLR to Tata is what kept Ford from needing a bailout. Had that deal not gone through, Ford would have been in an awful mess, just like GM.
"LJ909" (lj909)
08/16/2017 at 14:09, STARS: 1
Thanks and nope. I do this on my own time when something pops in my head. It usually at work. Its become like a hobby of mine now. Why do you ask?
"LJ909" (lj909)
08/16/2017 at 14:12, STARS: 1
Yea any way you go about it it was just wrong. None of them had anything in common what so every with the except of JLR and Aston bring British. A hands off approach wouldn’t have worked either. Ford is too corporate and like you said it would have just been a dilution with parts sharing etc. It was just bad. But like I said, how was VAG able to pull it off bur Ford wasnt? Thats racked my brain for years.
"William Byrd" (thedriver)
08/16/2017 at 14:15, STARS: 0
Always looking for contributors at RightFootDown.com. I like the way the article was structured, good details, etc. Nice work.
"RamblinRover Luxury-Yacht" (ramblininexile)
08/16/2017 at 14:16, STARS: 1
In not-really-defense of Ford’s decisions with Volvo, there is one kind of supply and demand curve that involves cost and sales both going up. Well, two. The first is “suddenly everyone starts buying this thing who didn’t have a reason before” and the second is “the competition starts sucking a lot more. All of it”. Obviously that is not what happened, but you can see some of the outlines.
Also, the long-leashed independent brands wanting to do their own thing with dad’s credit card, teenager style, was also seen with Saab under GM; possibly even worse. “DAAAAD! I can’t GO OUT with a worse dress on than MARCIA! I’ve got to be better than HER, or I’ll LITERALLY DIE”
"LJ909" (lj909)
08/16/2017 at 14:17, STARS: 0
This was great thanks. I always thought that Ford wanted these brands more for what they could do for Ford and less of them wanting to build themselves globally. I think I once read somewhere that Ford only want JLR for LR’s off road expertise because they wanted to make the Explorer more of a Jeep grand Cherokee competitor: American luxury but with off road chops. But then that didnt make sense because something like that should have gone to Lincoln. See why it was a dumpster fire? There really were no synergies.
I totally agree with you on the Sweedish Mercedes concerning Volvo. But in the short period of time, their lofty goals wouldn’t have been met. They wanted volume, which was why we got the S40, but luxury, which gave us things like the XC90 and S80 V8 models, from a brand that was pretty much equatable to Saab at the time. It was weird.
"KusabiSensei - Captain of the Toronto Maple Leafs" (kusabisensei)
08/16/2017 at 14:19, STARS: 1
Saab was a bunch of trolls that were going after GM’s accounting department.
Of course, the GM accounting department *needed* going after at the time, but that’s ancillary to the main objective.
But that’s what you get with trolls in Trollhättan.
"LJ909" (lj909)
08/16/2017 at 14:20, STARS: 1
Thanks again. This just popped in my head as I’m sitting at my desk. PAG has always bothered me on how it never succeeded. But I would definitely like to contribute. Shoot me an email: ltlhodge@gmail.com.
"PotbellyJoe and 42 others" (potbellyjoe)
08/16/2017 at 14:26, STARS: 0
One of the best things was the P1 and C1 platforms thanks to Volvo’s work making vastly superior Fords and Mazdas to what was previously brought to market.
"KusabiSensei - Captain of the Toronto Maple Leafs" (kusabisensei)
08/16/2017 at 14:28, STARS: 3
And to top it all off, remember who ended up building Volvo’s first V8.
Yamaha
The same guys who built the V6s and V8s in the Taurus SHO.
As RamblinRover pointed out, the only way for Ford to meet Volvo’s goals was either a) A whole bunch of new customers start buying Volvos (which wasn’t ever likely), or b) All our competitors start massively sucking (of which the main competitor of Volvo was Saab, not BMW or Mercedes. Even so, Mercedes wouldn’t start sucking overnight.)
There really wasn’t a way to build a Ford version of a Land Rover or a Range Rover. The closest they ever came was the Lincoln Navigator, which was just an F-150 with a different body (in essence, not precisely). And that was more of a reaction to the Escalade than anything else. A Range Rover-come-Lincoln (if it was even under discussion) would have been immediately shelved when the Escalade sales numbers were first released.
So since Ford really had no plan for Land Rover after the Escalade got released (which meant that off-road capability was neither here nor there for American luxury SUVs), it could then be tossed in as a pack-in with Jaguar to Tata.
"BrianGriffin thinks “reliable” is just a state of mind" (briangriffinsprius)
08/16/2017 at 14:28, STARS: 1
I’ve always been confused by why PAG was a “disaster”, other than the luxury cars weren’t luxury enough; perhaps because I grew up in the era of PAG it’s all just normal for me.
To me, Volvo was always a slightly cheaper, slightly mainstream competitor to BMW (same as VW). Jag was slightly nicer than Volvo and more performance oriented. Aston was one tier higher. Land Rover was the Jag of SUVs.
Ford got Volvo’s great chassis and made the best Focus ever. Volvos and Jags became reliable. Aston had a support network. LR was always an oddball.
"His Stigness" (HisStigness)
08/16/2017 at 14:30, STARS: 2
I guess I didn’t read the end very hard because I almost mentioned VAG.
I think VAG has been able to be very successful because they’ve managed to differentiate their cars just enough in different markets to make them popular. We know that all VAG products are either a Polo or Golf underneath (even a Lamborghini), but the rest of the car is changed enough, either with a nicer interior, or a cheaper one, and various other changes. And I think VAG is also very good with marketing the right car to people. They’re not going to waste their money in Spain marketing the Golf when people would rather have a SEAT. Or the same can be said in Eastern Europe with Skoda.
A really good example of good marketing is the A3 vs Golf in the US. Just look at the A3 and Golf in the US. VAG is smart enough to know that Audi customers wouldn’t want a low range BEV, so instead of selling an A3 with no engine, they sell it as a Golf. And they know VW customers don’t want to pay 40k for an advanced PHEV so they sell the A3 e-Tron. And for enthusiasts, this is fine because I already know the A3 is a good car because I know the Golf is the best car in the world (totally not biased since I own one =])
And I think another key to their success is just damn fine engineers doing a wonderful job of effectively spreading out R&D without diluting any brand.
But, in my own opinion, I think VAG is successful because they build damn fine cars, no matter the brand or price point. I don’t think the same can be said for Ford. Ford also needs to do a better job of not diluting their brands. They actually thought bringing the Continental back as an FWD Fusion clone was a good idea. Do you really think someone looking for an executive saloon is going to seriously consider a Continental compared to an S-Class, A8, or 7 Series?
NOPE!
"Arrivederci" (arrividerci)
08/16/2017 at 14:32, STARS: 1
The JLR sale to Tata certainly helped, but I would imagine it was the $23.6 billion in bank loans Ford received that provided the necessary cash for it to burn through the recession.
"Future next gen S2000 owner" (future-next-gen-s2000-owner)
08/16/2017 at 14:35, STARS: 1
The only way I see it working would be for the brands to only share things you can’t see or touch. Share correct platforms. Land Rover handles the SUV platforms. Jag/Lincoln share car platforms. Mercury and Volvo handling the middle. Aston getting it’s own platform but shared engine development with the higher spec Jag/Lincoln/land rover options.
"William Byrd" (thedriver)
08/16/2017 at 14:38, STARS: 0
Sent!
"KusabiSensei - Captain of the Toronto Maple Leafs" (kusabisensei)
08/16/2017 at 14:40, STARS: 1
The banks wouldn’t loan those out unless they could show some positive cash flow, even from one time events.
The sale of the PAG components helped the balance sheet leading up to 2008.
"Arrivederci" (arrividerci)
08/16/2017 at 14:42, STARS: 0
Except they received the funds from the loans in 2006. JLR didn’t sell to Tata until 2008.
"LJ909" (lj909)
08/16/2017 at 14:43, STARS: 0
Yea but most of what was on that platform we didnt even get here with the exception of the C-Max and I think the first gen Focus but Im not too sure.
"KusabiSensei - Captain of the Toronto Maple Leafs" (kusabisensei)
08/16/2017 at 14:45, STARS: 0
Aston got sold off to Prodrive in early 2007, and Rover itself (but not Land Rover) got sold back to BMW in 2006.
Those plans would have been part of the talks with the lenders, to establish future cash flow.
"RamblinRover Luxury-Yacht" (ramblininexile)
08/16/2017 at 14:46, STARS: 1
As a bizarre aside to the purchase of LR by Ford, a relative of mine thought that new Land Rovers were going to be just rebadged Explorers. No, he did. Stop laughing. That sort of “I thought I heard that somewhere” confusion can do real damage, though.
"PotbellyJoe and 42 others" (potbellyjoe)
08/16/2017 at 14:47, STARS: 1
The Mazda 3 and 5 were C1 platforms as well. And the Global C platform is a generational update to the C1 and lives on in almost all of Ford’s small cars.
"Brian McKay" (brianmckay)
08/16/2017 at 14:47, STARS: 0
“Sometiems its semeed” is three consecutive mistakes within a sentence. And other mistakes are sprinkled throughout, from the twentieth word onward.
"William Byrd" (thedriver)
08/16/2017 at 14:48, STARS: 0
Are you bucking for his job? Because I’m open to anyone interested. :)
"LJ909" (lj909)
08/16/2017 at 14:48, STARS: 1
Its because, like I pointed out, there were no synergies between the brands. Nothing clicked becauyse eberyone was all over the place literally.
Ford wanted a Sweedish Mercedes/BMW competitor in Volvo, when in reality it was nothing more than a Saab competitor with a faithful repeat customer base. They never would have gotten to the volume that Ford wanted them to be at. Its just not in the brand to do that.
Jag was still crap even back then and their quality only started to improve until recently. Trust me, I had a Jag S Type R. PAG solved no quality problems. The same thing goes for LR. I wouldnt be caught dead in one unless it had a great warranty. And it sucks because Ive always loved Range Rover Sports.
"LJ909" (lj909)
08/16/2017 at 14:58, STARS: 0
That could have worked. But they went beyond that and thats where the problems started. Volvo keys at Aston, cheap switch gear in luxury cars etc. They should have all been left to do their own thing in a sense.
"Chariotoflove" (chariotoflove)
08/16/2017 at 15:01, STARS: 0
I feel like the whole point of luxury marques is their uniqueness. The idea of putting cars together under a single maker so you can share parts works against that. For a recent example, look at the XTS and Impala. Even if every significant component between the two is different, the auto media all trashed the XTS for being a gussied up Impala because they shared a basic platform, even though they simultaneously praised the Impala.
The only way PAG could have worked is if they shared technology across units, but let each do its own thing with that tech. They would each have had to have been fairly independent. I have a hard time believing FoMoCo was wired to let that happen.
"Arrivederci" (arrividerci)
08/16/2017 at 15:01, STARS: 0
That is true - if Mulally did anything, he got Ford in a great cash position prior to the bottom falling out.
"LJ909" (lj909)
08/16/2017 at 15:10, STARS: 1
I think you can blame globalization and them being huge corporations for that. When you start to look at these automakers closely, cracks show. Like in you’re example, automakers still badge engineering, they’ve just gotten sort of better at it. Gone is the era of cookie cutter cars. But like I said cracks show. You’ll have what is essentially the same car underneath, but separated by designs and trim and price tags. One will get praise and the other will get shit, especially if its a luxury car. You’ll start to see places where the other car or the down market parts start to show though. There’s still too much to stepping going on and it holds back some brands and fails others.
PAG would’ve worked with tech sharing, but nothing beyond that. But with the time frame this happened in, I dont think Ford would have had the cash to let these marques do their own thing with their own engines and unique platforms.
"Chariotoflove" (chariotoflove)
08/16/2017 at 15:17, STARS: 1
In general, American industrial corporations operate on quarterly or yearly time frames. It’s very hard for management to carry out a vision that requires multi-year commitment of resources and delayed gratification for investors.
"KusabiSensei - Captain of the Toronto Maple Leafs" (kusabisensei)
08/16/2017 at 15:23, STARS: 0
And for that he should be commended.
"ranwhenparked" (ranwhenparked)
08/16/2017 at 18:16, STARS: 1
Nasser believed that the luxury field was going to be the only segment where established automakers like Ford were still going to be able to compete in the first half of the 21st century, once the Chinese and Indians took over the lower priced fields. The PAG was his effort to future proof Ford Motor Company by dominating the global luxury field.
Honestly, though, most of the mistakes were made before he got there. Ford already owned Jaguar and Aston-Martin, and the two new brands Nasser bought - Land Rover and Volvo - actually weren’t terrible purchases. Land Rover has pretty much always made money, and Volvo was actually in the black for most of the time it was under Ford ownership (it only really started to struggle for a few years toward the end of Ford’s tenure, which is why Alan Mulally dithered for a while on whether to sell them).
The failure was in the management structure - trying to integrate Lincoln-Mercuy, Aston-Martin, and Volvo with Jaguar-Land Rover (which did belong together). It created another level of bureaucracy and did nothing to improve the operations of any of the brands.
Also, Ford’s decision to emphasize retro styling at Jaguar wound up being a colossal mistake, though there were certainly other companies doing the retro thing at the time.
The other problem was that all the investments in PAG were at the expense of Ford’s other operations, which left their North American passenger car lineup woefully inadequate for when fuel prices starting climbing.
"LJ909" (lj909)
08/16/2017 at 18:24, STARS: 0
Nasser seemed to see the world though his own weird view. For whatever reason he thought that the Indians and Chinese would dominate the cheap car market. it never happened. I also think he was being overly optimistic about Fords prospects concerning luxury auto sales.
If Ford had done them right, Volvo and JLR, specifically RR could have done well because like you said, they were good purchases. But when you buy something and it does worse than before you owned it, something is wrong. If they had done good, Ford would have probably folded Lincoln and had Volvo take up their luxury mantle.
Like I said, it was just terrible all around. Things that didnt work under PAG worked out from under PAG, like Jaguar’s styling and sales, Volvo creeping into the luxury market etc.
"ranwhenparked" (ranwhenparked)
08/16/2017 at 18:46, STARS: 1
Oh, no doubt. The mistake was trying to move Volvo too far upmarket, too fast. You can’t change a brand’s entire positioning overnight, and especially not before you really have the right products in place to pull it off. At best, Volvo just sort of treaded water under Ford’s ownership, which certainly wasn’t a responsible use of company money.
There’s also evidence that Jaguar’s design aesthetic was dictated to them by corporate in Michigan, left to their own devices, they would have moved to a more modern identity much sooner. Of course, the British designers at Rover Group didn’t want to do a retro MINI either and had to have that dictated to them by BMW, so, at the time, it didn’t seem like such a dumb decision.
The sales projections were widely over optimistic, though. Jaguar has never been a high volume brand, its always been a smallish boutique builder. They can’t survive that way forever, but you can’t go from selling 60,000 cars a year to 800,000 overnight.
I think he made up whatever numbers he thought would sound high enough for the Ford family and other shareholders to get out of his way and let him do whatever the hell he wanted.
"pip bip - choose Corrour" (hhgttg69)
08/17/2017 at 07:06, STARS: 0
management fucked with product and doomed the shitshow.