Tag Archives: Ford

Automotive News Europe Congress – how are the industry’s leaders facing up to unprecedented change?

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Four weeks today I’ll be at the Automotive News Europe Congress in Barcelona. It always attracts senior executives from across an ever-broadening industry, and now is a better time than ever to be part of it – the industry is on the cusp of dramatic structural and cultural upheaval.

POSCO_main_1300x550_170407The excellent speaker line-up reflects those changes. With SEAT, Lamborghini and Italdesign all on the speaker’s podium, VW Group is somewhat over-represented – that’s because SEAT’s the Host Sponsor, but it also means we get to hang out in Barcelona. And the line-up does reflect many of the changes facing the industry.

This is what I want to hear from them.

Luca de Meo – President, SEAT:

How is he intending to give Spain’s national brand sustainable relevance? They tried to become an Alfa-Romeo-esque sport-driven brand, and now they’re committing heavily to SUVs, but so has most of the competition already. Aren’t SEAT’s differentiators of small/compact cars and a weighting towards southern Europe also its weaknesses? How will SEAT integrate the VW brand’s surging EV technology into its own offering? And what’s the dynamic within the bulging VW group brand portfolio, especially the no-longer budget Skoda brand? As keynote speaker, de Meo’s positive claims for SEAT will be under close scrutiny.

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Brigitte Courtehoux – Head of Mobility Services, PSA:

More than one OEM has now publicly stated that they’re transitioning from manufacturer and retailer to mobility provider, but what’s the substance behind this? Nissan and Volvo have extensive ongoing consumer trials of autonomous vehicles; what is PSA doing? How is it approaching the potentially seismic consumer shift from purchase and conventional leasing to flexible and ultra short-term leasing, on-demand usage, and personal mobility platforms encompassing public transport, Uber and growing non-driver urban populations? And where does the Opel brand fit into this scenario?

Jim Farley – Executive Vice President, Global Markets, Ford:

With Mark Fields having vacated the top seat at Ford Motor Co this is interesting timing. Ford has lacked focus globally since Alan Mulally departed in 2014. In Europe the company has made money when others haven’t, and GM Europe has thrown in the towel. But Ford is still part of that squeezed middle – mainstream brands which cannot become premium but are not value brands or challengers. What is the global vision? The company could – should – be leading the world in mobility, just as it did with the Model T a century ago. And what is its future in a fracturing Europe? With profits in the region down could it even follow GM to the exit door? Farley, newly promoted to a global role but with European oversight, is touted as a future global Ford chief so his view will be fascinating.

Didier Leroy – Executive VP, Chief Competitive Officer & President, Business Planning & Operation, Toyota Motor:

Toyota’s first foreign executive VP, Leroy provides a uniquely European focus for the Japanese giant. From a European point of view Toyota is nowhere near its global standing – 10th in volume terms, behind Skoda – and Lexus has simply never taken off. Globally it has never owned the EV and hybrid territory the way it should have done as the pioneer, which has clouded its brand purpose and allowed the likes of Skoda, Hyundai and Kia to steal hard-earned European market share, and the current uncertain next-generation technology strategy isn’t helping. Now there’s a global profits crisis, so how will this affect Europe operations? The man with the longest job title in the industry in uniquely placed to make the company’s case.

Hakan Samuelsson – President & CEO, Volvo Car:

As a challenger brand Volvo has the agility to reinvent itself and shift to meet changing market needs. And, sure enough, it has just announced that it will stop making diesels altogether, admitting that meeting emissions targets is too expensive. Other than VW’s virtue-out-of-necessity move to EVs, the bigger players have too much invested in existing technologies to be as bold, but Volvo’s move to EV and hybrid power brings the tipping point into view. The company is also at the forefront of automation, with its brand imperative of safety meaning that Volvo automation systems will effectively become the industry benchmark. Can this small OEM be the catalyst to both the demise of the internal combustion engine and the mass adoption of automated cars?

Alain Visser – Senior VP, LYNK & CO:

As the face of LYNK & CO, Alain Visser is fronting a company embodying many of the challengers facing existing OEMs. It’s not only offering cars designed for electric powertrains and connectivity, it’s challenging the whole existing business model by designing one around emerging market expectations. Direct, online sales, fixed pricing, home delivery and a subscription model for the app generation. “The word doesn’t need another car brand,”, Visser said. No existing OEM would establish itself now using the archaic distribution models they’re tied to, but LYNK & CO is part of Geely and was dreamed up at Volvo labs, so can the company make it work and head off the Teslas, Ubers and as-yet-unknown disruptors who come in totally fresh, with no automotive background?

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Hildegard Wortmann – Senior VP, Brand, BMW:

For me BMW is in some ways the most interesting OEM represented in the speaker line-up. Recently replaced by a resurgent Mercedes as the number one premium brand globally, it has lost its way a little: a commoditised 3-Series, bland and questionable styling, not enough true SUVs, an i-Series low-emissions sub-brand which has stagnated with just two, polarised products book-ending a product void. And now it faces a fundamental challenge to its very purpose – the Ultimate Driving Machine – in the shape of automated mobility. What will BMW’s place be in the future automotive landscape, and how will it get there? As the brand chief, Wortmann should provide a clear insight.

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I’m a little biased as I worked with ANE for several years in the 2000s, partly on this event, but for me the Congress is the best automotive trade event in Europe. Readers wanting to register can get a €100 discount by visiting the link below and quoting the code LONGSHORE. It can be used for either the Congress/Rising Stars combo or the Congress only.

Hope to see you there.

https://www.regonline.com/registration/Checkin.aspx?EventID=1934274 

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Why Audi’s fall to 3rd place premium brand is a good thing – it’s simple

audi-logoAudi, the recent king of volume growth among premium brands, is about to be overtaken by Mercedes and slip to third in global premium-car sales.

It will be a big change from just a few years back. Mercedes was overtaken as number one by BMW in 2005, and was replaced as number two by Audi in 2011.

And last year, in Europe, ended with Audi as Europe’s number one premium brand. But Mercedes, with a dramatic product offensive, industry-leading quality, a turnaround in China, punchy marketing, domination of Formula 1, steadily growing profits and record sales, is on its way back to number one here too, quite possibly by the end of the year.

So this is a significant moment.

Paradoxically, it may be Audi’s very drive for volumes that’s seeing it slip behind Mercedes and BMW. Last year it was the 6th-highest selling brand in Europe overall, and fifth in the UK, where its volumes approach twice that of Toyota. It’s done this by storming into new segments, fuelling new niches, and aggressively invading mainstream territory.

It has trumpeted the number of models and derivatives it offers, talking of an extraordinary 60-plus model lines. So there’ something for absolutely everyone, and ultra-low interest rates have meant that anyone can get into an Audi, including people who may have only ever had cars from mainstream brands. If you can lease one for the same as a Nissan, Toyota, Renault or Ford, why wouldn’t you?

So how can all this lead to a slowing of sales growth? It has unavoidably become commoditised, but more importantly it has become complicated.

With such a vast product range, what’s needed is simplicity. Audi has a wonderfully simple and recognisable graphic identity, and product design which shows a confident simplicity. Design and engineering teams across all car manufacturers are engaged in delivering a sea change in how we interact with our cars, through the integration of connectivity and the emergence of autonomous driving systems. The human-machine interface is having to be transformed in order to deliver such complex technology seamlessly and intuitively.

But the same drive towards a necessary simplification of these for the user has not been applied to distribution and retail operations, and how the car manufacturers present their products.

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SUV? Low-riding SUV? Crossover? Coupe? Sportback?

Is there anything less intuitive than navigating vast product ranges of SUVs, crossovers, off-roaders, soft roaders, sportbacks, liftbacks, hatchbacks, high-riding hatchbacks, low-riding SUVs, SUV coupes, people carriers, sports tourers, sportswagons and estates? This doesn’t help the consumer. And in this respect the premium brands are failing delivering an appropriate brand experience at a critical point in the customer journey.

In brand consultancy Siegel+Gale’s last Global Brand Simplicity Index, Audi, Mercedes and BMW were all categorised as ‘low score/high premium’, meaning that “They need to simplify their brand experiences, and they’ll be able to reap significant rewards if they do”, according to the report. Tellingly, only Ford – a mainstream brand which has simplified its product portfolio – was in the ‘high score/low premium’ category, for brands already seen as simple and needing instead to focus more on showing the value of the simplicity they offer. Ford was also the only car brand to make it into the world’s top 40 brands across all sectors, in an impressive 17th place.

It’s clear: by expanding their product ranges so fast and so far, the German premium brands have made a rod for their own backs. Mercedes, in 44th spot, is doing better than BMW and Audi, in 65th and 66th places. But it’s humble Ford which leads the way, and ironic that Audi’s mainstream VW parent brand beats it in all the key markets.

It’s a picture reflected in how these brands fare in the UK. Ford is streets ahead at number 19 in the list, with Mercedes at 59, BMW at 81 and Audi at 89. And in the USA, not one of the German brands makes it into the listing of 125 brands, while Ford is at 24.

Look more closely and you see that, in the UK, Audi is the only car brand classified as ‘low score/high premium’, emphasising the gap between where it is an where it could be. But you’ll also see that BMW dropped 15 places in the latest GBSI. That followed another nosedive of 23 places the previous year in the global rankings, and a remarkable fall of 35 places in the listings for Germany, where the native car brands normally perform far better than they do elsewhere.

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Two different models from two completely separate model lines – apparently

So BMW, right now still the highest-selling premium car brand around the world, tumbling down the order. An anomaly, surely? I don’t think so. Audi has been the most aggressive of the three German premium car brands, but BMW was first to attack the mainstream when it pushed the 3-Series hard into fleets in the last decade, effectively making it an upmarket Ford Mondeo. Mercedes followed, with extremely aggressive lease pricing, and paid for it; Audi has merely taken it to the next level with its model proliferation, while BMW has tried to do the same, but has introduced a number of unloved, neither-fish-nor-foul models for tenuous niches. It has lost brand focus and the GBSI reflects that.

And this is the real significance of the current shift among the German premium brands: Audi and BMW may come to be glad of their soon-to-be status as numbers two and three in the premium sales charts. They could focus more on other ways of achieving success, like customer retention, car-sharing and on-demand mobility, to better fit consumer needs in a world where Apple, Netflix and Uber have set new paradigms for consumption.

Volume for volume’s sake is the enemy of the premium brand. Simplicity, clarity, vision and a better brand experience are its friend. Achieve that and the volumes will follow.

Ford’s future: chillout and chocolate or mobility for the masses?

unlearn_homepagewebbannerThings aren’t getting much easier for the mainstream, high-volume car brands.

At the end of the last decade they were savaged by a perfect storm of a territorial invasion by the German premium brands, the economic meltdown, and the opportunism of the value brands seeking to capitalise on it. Ford, GM and the like were left struggling for relevance.

Visitors to the current Geneva motor show are greeted outside the hall by a vast Ford billboard. It features the new generation of the iconic Mustang muscle car, flanked by the GT supercar and the new Edge SUV, and asks us to forget everything we know about the brand. The Mustang hero vehicle doesn’t even wear the Ford blue oval.

It’s not rocket science to work out they’re saying: we make more than just commodity cars, we’ve got the heritage and we’ve got the SUVs everyone wants these days.

Go inside and another layer of icing has been put on the cake. For the first time there’s a real range of Fords adorned by Vignale sub-branding. Vignale is the company’s premium line, also offering concierge-style customer service. And they’ve pulled off a real coup by installing a Vignale lounge in the departure area of the Geneva airport. Chillout music, free massages, coffee, chocolates, water, workstations and wifi will go down very well with the millions going through the airport – and almost certainly be more effective than the show presence.

IMG_2582Yet what do these things say about the Ford brand? “We make great cars. They’re well designed, comfortable, high-quality and handle well. But we can’t persuade private buyers to consider us alongside Audi, BMW Mercedes and Volvo.” And the focus on the Mustang, GT and Edge – which as a large, expensive SUV will remain a niche choice against the premium competition – makes a telling contrast with Renault. The French brand was the most distressed of all after the 2008 crash, but now boasts a confident, all-new range of cars. No halo products, no premium pretensions; just attractive, honest cars people want to buy, including electric vehicles with dedicated designs.

It begs the question of what Ford’s purpose is. The company appears to be hoping to build brand equity from its niche offerings rather than focusing on what makes Ford a real brand – offering excellent quality products at a mainstream pricepoint. Other companies have done this without denigrating their brand – look at the iPhone. And ironically Ford itself has history here.

Over 100 years ago Ford revolutionised motoring with a commodity product, the Model T. Today, in an age when mobility will alter radically, it should not be beyond Ford to help drive that change for today’s masses, be an enabler, and build an everyman brand which is also a valued one.

Give the Blue Oval back its meaning, Mr Ford, and wear it with pride.

Large MPVs – the next big thing?

Renault-Espace-0Large, stylish MPVs could be making a comeback. At the recent Paris motor show Renault relaunched the Espace as a bold, well designed MPV-cum-crossover, and Ford showed the latest S-Max, which will be a recipient of the company’s new Vignale luxury trim and concierge service.

The premium brands are making moves too: Paris saw the launch of the production BMW 2-Series Active Tourer, a compact MPV, while Mercedes – which replace the MPV-style A-Class with a conventional hatchback a couple of years ago – reaffirmed its interest in that segment by revealing a new B-Class.

That the two German premium brands are investing effort into MPVs is significant, but they may be missing an opportunity beyond the compact, higher-volume segments. Large MPVs are a neglected niche: after Toyota introduced the innovative and stylish Previa in the mid-1990s, the territory was commoditised by the mainstream brands, with utilitarian van-based models and products marketed as bland school-run devices offering space but no character and a mediocre driving experience. MPVs had become merely ‘people carriers’.

SUVs then entered the marketed. They were premium. They needed to be, because of the cost of the four-wheel-drive technology and – starting with the first BMW X5 – the additional cost of engineering decent handling into a heavy, high-centre-of-gravity lump. But more importantly the SUV concept was American, so they were marketed as lifestyle vehicles, recreational tools. They enhanced your life rather than announcing to the word your grim acceptance of its responsibilities.

Of the premium brands only Mercedes persevered with the large MPV, but its products have remained van-based. So Renault may have hit on something with the new Espace. Not everyone wants an SUV – Audi Q7s, BMW X5s and Mercedes MLs have begun to symbolise some of the less appealing characteristics of the monied middle-classes. And very few need off-road capability.

2015-volvo-xc90-steering-wheelI was with a Volvo strategy guy at Paris and it got me thinking. I’d probably buy an S-Max if it had a different badge. I’d almost certainly buy the Espace if they produce it in right-hand drive. But I’d far prefer it with a Volvo badge.

Volvo can carry off a contemporary interpretation of a large, MPV. It has the brand-width to do it (unlike Jaguar, another near-premium brand, which can stretching itself to SUVs but no further). An MPV would suit Volvo’s brand values and its design aesthetic. Volvo is about stylish functionality – vehicles with a purpose but also a personality, confident but classless, luxurious but life-2015-Volvo-XC90-interior-controls-press-imageenhancing. And its products are increasingly about cabin design – supremely comfortable but understated, ergonomically intelligent, with natural materials, authenticity and the influence of Scandinavian home interior trends. What better medium to express this than an inherently spacious, light and flexible MPV cabin?

Volvo’s boss recently said that until 2020 it will only replace existing models. That’s a pity, because there’s a gap in the market and a brand fit. And if Volvo were to fill that gap it would challenge the German big three by setting a trend rather than merely offering an alternative to a product type already offered by the competitors. Which would make the brand far stronger.

 

Volkswagen group not profiting from its brands’ equity

_origin_Fakti-kas-tevi-parsteigs-9Martin Winterkorn, boss of Volkswagen Group, admitted this month that the business “urgently” needs better profits, and today’s half-year results announcement confirmed falls in both profits and sales. This is the company, remember, which has targeted global number one status by 2018, and since Winterkorn became CEO in 2007 CEO has increased production by 4m units and doubled its revenues.

One of the reasons for VW’s poor profitability is that it isn’t global in terms of geographical spread. It’s in the key growth market, China, but is actually over-dependent on it, whereas it has little traction in south and south-east Asia. And market share is relatively low in the USA, with the VW brand on the slide. Another factor is that VW is light on compact SUVs, the biggest growth segment globally. A further reason and perhaps the most significant is its sheer size – a company this big simply can’t avoid inefficiencies.

But here’s the elephant in the boardroom: VW’s problem is also down to brands. VW group isn’t merely huge; it has a huge brand portfolio, with 12 brands in total – stretching to trucks and motorbikes – and over 310 models. Paradoxically, rather than providing economies of scale, in the accumulation of brands the collective mass has outweighed the ability to exploit the efficiencies.

By 2007 it already had the considerable challenge of consolidating and managing a passenger car portfolio of SEAT, Skoda, VW, Audi, Lamborghini, Bentley and Bugatti. Each was struggling for both individual relevance and group synergy. Skoda had already begun to produce cars in the VW brand’s space. VW in turn was encroaching on Audi, which was moving onto mainstream segments previously the preserve of these brands while simultaneously launching de-facto Lamborghinis. Bentley was doing a fine job. Bugatti was, well, Bugatti, and SEAT was struggling not to be a Spain-only brand and was being jumped by Skoda. The group was competing with itself, and the mainstream brands were sharing the same market space but without sharing the economic benefits. And meanwhile the world was plunging into an economic downturn.

So what did VW do? Since Martin Winterkorn’s 2007 accession it’s added four more brands: Porsche, Ducati, MAN and Scania. It has also become the largest stakeholder in Suzuki and even consumed the design house Italdesign Giugiaro. And Skoda has stated that it wants to sell on quality and style, while Lamborghini and Bentley have announced SUVs.

VW’s strategy goes directly against the new automotive industry paradigm. Toyota has continued to excel in financial performance. It has not acquired other makes but concentrated on its core brand, which has maintains clear values, and its own premium-luxury brand, Lexus. Hyundai, which led even Toyota on profitability in 2013, was forced into a merger of unequals with Kia when the South Korean business bubble burst in the late 1990s. They produce cars for the same market segments, yet with only two brands they’ve not only managed the situation by differentiating the brands but have grown stratospherically since 2007. Meanwhile Ford has divested itself of Aston Martin, Volvo, Jaguar and Land Rover, and is emerging strongly under the ‘One Ford’ mantra. GM is now doing the same in Europe, discarding Chevrolet to concentrate on Opel/Vauxhall. And VW’s German rival BMW has limited its acquisition trail to the very distinct Rolls-Royce and Mini brands and retained the BMW group values across its portfolio.

They’ve all benefitted from a focus on a single brand or a primary and secondary brands. It’s very hard for Volkswagen group to do the same. The VW range’s own brand is still strong in spite of becoming part of the uncomfortable brand portfolio dynamic. But the group’s brand is infinitely less than the sum of its parts. It’s impossible to say what it stands for in the way that you can about its volume peers Toyota and Ford.

That VW’s profits are suffering is not surprising. That’s what happens when a goal defined by volumes is set. If the goal were instead to define and differentiate the brands more clearly, with each given the objective of becoming the most desired among consumers, then the volumes would follow. They would do so more slowly but they would do it sustainably.

Ford says upper-medium segment still important – it is if you’re German

ford-vignale-concept-new-photos-released-photo-gallery-medium_13Ford was quoted a few days ago saying that the upper-medium market segment, in which its Mondeo competes, is alive and quite well. Yes, it still accounts for a significant number of vehicles. But

The shift away from traditional large-ish cars took a permanent and dramatic turn in 2008. Two things happened. The sight of ashen-faced bankers carrying cardboard boxes out of the Lehman Brothers building made people realise that the world was indeed in economic meltdown. Things would change, including our buying habits. At the same time, Nissan had replaced its medium-sized Almera and upper-medium Primera with a single car and consumers were beginning to notice it. The Qashqai had the footprint of the Almera but the interior space of the Primera. It offered the appeal of an urban crossover without the pretenand its owners were buying into a new trend, not an image of company car drudgery.

From a financial point of view people questioned whether they needed a large car. From a lifestyle point of view they questioned what they wanted a car to do. Nissan had invented the popular crossover.

Since 2008 the UK has seen a major shift away from the upper-medium segment to smaller, more efficient and more versatile cars – minis and superminis as well as crossovers, SUVs and MPVs. So, despite that fact that the company car sector – the biggest taker for upper-medium cars – still accounts for over 50% of the market, the segment has dropped by over 45% and is barely a third the size of the lower-medium segment. At the same time minis and superminis, multi-purpose and dual-purpose vehicles have grown, the latter overtaking upper-medium volumes. The only upper-medium car to make it into 2013’s top ten sellers was the BMW 3 Series (at no 7, one place behind the Qashqai).

Which raises the really important issue for Ford. The company was also quoted saying that customers use a manufacturer’s ability to produce an upper-medium model as a measure of brand quality. I don’t think so.

Ford is stuck with the Mondeo. Unlike Nissan with the Primera it has a valuable share of the fleet market. Ford also has a loyal private customer base for whom ‘Ford’ is British. Dagenham. Honest. And of course the company shed its premium brands, Jaguar, Land Rover and Volvo for a One Ford strategy a few years ago. And now, with the relentless invasion of the mainstream segments by the German premium brands, coupled with the new popularity of the value brands, Ford and the the others in the middle ground are being squeezed. Hard. They have to fight back.

So Ford has announced the Vignale sub-brand to be introduced on high-spec versions of the smart next-generation Mondeo, offering dedicated, premium service. Renault is doing something similar under the Initiale banner. GM has dropped Chevrolet to concentrate on targeting Opel/Vauxhall at the German premium makes. The problem is that it’s easy for Audi, BMW and Mercedes to grow their customer base by extending their range to include smaller, cheaper, more family-friendly models. It’s a different thing altogether for a solidly mainstream brand to try to develop an upscale customer base.

The idea that medium-to-large everyday cars offer a quality marker for a brand is only right if you’re talking about Audi, BMW and Mercedes. They can even sell old-school three-box saloons by the bucketload in the form of the A4 and A6, 3 and 5 Series, and C and E Class. And if consumers want to go off-piste they’ve got Volvo for safety and Scandi design, Lexus for hybrid technology and build quality, VW for those who prefer What Car? to Superbrands. No matter how good a Mondeo is objectively – and it is good – the blue oval is a glass ceiling.

For Ford, providing a better experience and better product will almost certainly serve primarily as a differentiator from other mainstream brands rather than enabling them to compete with premium brands. Especially in the upper-medium segment which is largely responsible for way we aspire to the German badges.