Ford’s Brazilian line-up, 2021. Once upon a time, there were locally developed Corcels and Mavericks; even the EcoSport was a Brazilian development. Today, it’s Mustang, a couple of trucks, and a rebadged Chinese crossover.
We heard a lot about the demise of Holden as GM retreats from continents at a time, seemingly in a quest to be a Sino-American player rather than a global one. Weâve heard less about Ford shrinking as well, though the phenomenon is similar.
Fordâs Brazilian range is now the Mustang, Ranger, Territory (which is fundamentally a badge-engineered Yusheng S330 from China with a Fordized interior), and Bronco. Itâs beating a retreat from Brazil, at the cost of tens of thousands of jobs (its own, plus associated industriesâ) in a country that already has 15 per cent unemployment.
Their reasoning is that electrification and technological change are driving restructuring, which seems plausible, till you realize that in other markets, including Thailand where thereâs still a plant making Fords, the company is fielding essentially trucks, the truck-based Everest, and the Mustang. Ford warned us that this would be its course of action a few years ago, but now itâs happening, it makes even less sense.
Say itâs all about (eventual) electrification. Youâd want vehicles in your portfolio now that lend themselves to energy efficiency, so that people begin associating your brand with it. Trucks and pony cars donât fit with this long-term. And I still believe that at some point, even before trucks commonly have electric powertrains, someone is going to say, âThese tall bodies with massive frontal areas are using up way more of the juice Iâm paying for. We donât need something this big.â
Letâs say Ford quickly pivots. It sticks a conventional saloon body on the Mustang Mach-E platform (which, letâs be honest, started off as a Focus crossoverâthe product code, CX727, tells us as much) in record time. Would anyone buy it? Probably not before they see what the Asians, who donât abandon segments because they canât be bothered working hard, have in their showrooms. Toyota, Honda, Hyundai, Mazda, and countless Chinese marques, have been building their goodwill in the meantime.
Itâs why two decades ago, I warned against DaimlerChrysler killing off its price-leading brand, Plymouth. You never know when recessionary times come and you want an entry-level brand. Before the decade was out, that time came, and Chrysler didnât have much it could use without diluting its existing brandsâ market perceptions to have some price leaders.
Ford retreating from B- and C-segment family cars, even CD- and E-segment ones, means itâll find it difficult to get back into those markets later on. A good example would be the French, who donât find much success in the large saloon market generally, and would find it very hard to re-enter in a lot of places.
I realize the action isnât in regular passenger cars these days, but the fact that Fiat, Chevrolet and Volkswagen still manage to field broad lines in Brazil suggests that the market still exists and they can still eke out some money from their sales.
Itâs as though the US car firms are giving up, ceding territory. And on this note, Ford has form.
In the 1990s, Fordâs US arm under-marketed the Contour and Mystique Stateside, cars based on the original European Mondeo. I saw precious little advertising for them in US motoring press. As far as I can tell, they wanted to bury it because they didnât like the fact it wasnât developed by them, but by Fordâs German-based team in Köln. âSee, told you those Europeans wouldnât know how to engineer a CD-segment car for the US.â The fiefdom in Dearborn got its own way and later developed the Mazda-based Fusion, while the Europeans did two more generations of Mondeo.
In the 2000s, it decided to flush the goodwill of the Taurus name down the toilet, before then-new CEO Alan Mulally saw what was happening and hurriedly renamed the Five Hundred to Taurus.
It under-marketed the last generation of Falconâyou seldom saw them on forecourtsâand that looked like a pretext for closing the Australian plant (âSee, no one wants big carsâ) even though by this point the Falcon was smaller than the Mondeo in most measures other than overall length, and plenty of people were buying similarly sized rear-wheel-drive saloons over at BMW and Mercedes-Benz.
The Mondeo hybrid has been another model that you barely hear of, even though the Fusion Hybrid, the American version of the car, had been on sale years before.
Think about what they gave up. Here, Ford once owned the taxi market. It doesnât any more as cabbies ultimately wound up in Priuses and Camrys. Had Ford fielded a big hybrid saloon earlier, Toyota might not have made inroads into the taxi market to the same extent. Ford almost seems apologetic for being in segments where others come to, and when challenging the market leaders, doesnât put much effort in any more.
Objectively, I would rather have a Mondeo Hybrid than a Camry, but good luck seeing one in a Ford showroom.
Maybe Fordâs smart to be putting all its resources into growth areas like trucks and crossovers. Puma and Escape have appeal in the B- and C-segment crossover markets in places like New Zealand. Theyâre fairly car-like now, too. But to me thatâs putting all your eggs into one basket. In countries like Brazil and Thailand, where Ford doesnât sell well resolved crossovers in these segments, itâs treading a fine line. I look at the market leadership it once had in cars, in so many places, and in 2021 that looks like a thing of the past. Moreâs the pity.
The 2009 Chevrolet Caprice SS, sold in the Middle East but made in Australia.
I came across a 2017 interview with former Holden chairman Peter Hanenberger, who was in charge when the company had its last number-one salesâ position in Australia. His words are prescient and everything he said then still applies today.
He spent over four and a half decades at GM so he knows the company better than most. Since he departed in 2003 he had seven successors at the time of the interview; and I believe there have been a couple more since.
A few interesting quotes.
âItâs [now] a very short-sighted company.â
It feels like it. The sort of retreating itâs done, the dismantling of global operations, and the failure to see how global platforms can achieve economies of scale is something only a company beholden to quarterly stock price results will do. And it doesnât help its longevity.
Even Holden, which looked like it was going to simply depart the passenger-car sector at the end of last year before a full withdrawal now, tells us that there doesnât appear to be a long-term plan in place that the US management is committed to. Not long ago they were going on about the two dozen models they planned to launch to field a competitive line-up.
âFor me General Motors was a global player. Today General Motors is shrinking to an American company with no foresight, which is in very bad shape, which has missed the market.â
Remember Hanenberger said this in 2017, when it still had presences in many Asian countries. In 2020 it very much looks like GM will be in the Americas (where it still fields reasonably complete line-ups, although God knows if they have anything in the pipeline to replace the existing models) and China. Russia, India, Australia, New Zealand and Thailand are gone or going, and western Europe went in 2017 before the interview.
âMaybe it fits into the vision of Trump; America first. But how the world is going to work also in the future is not because of America first and America only. Itâs global. I think there will be no GM in the near-future.â
Everyone else is desperate to do tie-ups while GM retreats. I think GM will still be around but itâll be a Chinese firm.
âI couldnât give a shit what they thought in America.â
I donât mean this as an anti-American quote, but I see it as a dig against bean counters (whatever their nationality) fixated on the short term and not motorheads who know their sector well.
âFor me Holden didnât have enough product, and the second one [priority] was I wanted to get these cars they had into export. For me it was very clear the products they had could be exported and they should go on to export.â
You saw the failure of this in the early 2010s when Holden failed to keep its Middle Eastern deals, and the US models returned. It could have been so different, though I realize GM was very cash-strapped when they needed the US taxpayer to bail them out.
Bruce Newton, who wrote the piece, says that the Middle East was worth up to 40,000 units per annum, with A$10,000 profit per car. It cost Holden A$20 million to develop them for left-hand drive. Iâd have held on to that sort of opportunity for dear life.
âThere was nothing going on that was creative towards the future of Holden as in Australia, New Zealand and toward the export market. They just neglected this whole thing.â
That was Hanenberger when he visited his old workplace in 2006. With product development cycles the way they are, itâs no wonder they were so ill placed when the Middle Eastern markets lost interest in the VE Commodore and WM Caprice (as the Chevrolet Lumina and Caprice), and China in the Buick Park Avenue.
Itâs an interesting interview and perhaps one of the best post mortems for Holden, even if it wasnât intended to be so three years ago.
GM has changed its mind again: Chevrolet will not be its global brand.
The strategy, where Daewoo was rebadged Chevrolet in western Europe at the beginning of the century, has been deemed a failure, and GM will withdraw its core Korean-made models such as the Spark, Aveo, Cruze and Malibu, by 2015. It will return to where it was a few decades ago: a brand selling quintessentially American cars such as the Camaro and Corvette.
For many years on this blog, I expressed my doubts on rebadging Daewoos, either as Holden or Chevrolet. If GM wanted a budget brand, it had one in Daewoo. With the exception of the Malibu, the cars always looked Korean anyway, despite some US (and Australian) styling input, and Kia and Hyundai demonstrate that there is no negative brand equity these days with ‘Made in Korea’.
It was impossible for GM to shake off Chevrolet’s American country-of-origin effect in the last decade in western Europe. GM also believes that having Opel and Vauxhall as its mainstream western European brand is enough.
The theory wasn’t all wrong though. In the last decade we’ve seen the continued rise of Ć koda, and Dacia has managed to find buyers. Nissan has brought back Datsun in an effort to appeal to cost-conscious consumers who want a simple car. Daewoo could have had a role to play in Europe, if GM had got the marketing right.
It also seem to have got things wrong with Opel in Australia, pulling out after an even shorter time. I seem to be correct again when I argued that brands like Holden could not be abandoned in favour of Chevrolet, because you can never rely on GM for a long-term strategy. There are no economies of scale in promotion when Chevrolet simply isn’t as well regarded outside the Americas, and where we consumers are still quite happy to use certain domestic or regional brands as mental shortcuts to cars being sold as domestic appliances. Levitt isn’t to be applied blindly.
Every now and then, the Harvard Business Review comes up with some gems. This video, from Anna Tavis, head of talent and development at Brown Brothers Harriman, says that global experience is more important than education if you wish to be successful in business.
She also hints at the importance of differentiation, which I often apply to brands. Since many of us have created personal brands to some degree or another, in a world where MBAs are a dime a dozen, what extra attribute do you offer? What is your differentiating factor?
Leadership, too, comes from having that international edge: if you have an understanding across cultures, you are more open to best practices from all sources, rather than relying on insular thinking. Too many organizations slip on this front: they see their main competitor as the next biggest city in their own country, for instance, when there’s not much excuse, in an interconnected world, to not set (or exceed) a benchmark with the best in the world.
Robin Capper referred this to me, found on Autocarâs blog and penned by Hilton Holloway. I’ve only taken excerpts:
[A senior MG Rover insider] claims MG Rover bosses were offered a life raft shortly after they bought MG Rover for a tenner. Realising that Roverâs L-series diesel engine was hopelessly outclassed, they approached Fiat about buying in its JTD diesel. Fiat, the insider claims, came back with an amazing offer. MGR could have the diesel, but it could also license the Fiat Stilo platform. Fiat had installed at least double the capacity that the slow-selling Stilo needed and had capacity to spare. The fact that the Phoenix Four didnât return Fiatâs call suggests that they never really intended to turn MGR around by their own efforts.
Rumour has it that the new Saabâa small car (finally)âwill resemble the ur-Saab, the 92. In fact, inside Saab, it has the codename 92.
Where have I heard this one before? I know. Stefan Engesethâs Detective Marketing, 2001 edition. And from what I understand, since in 1999 I could not read much Swedish, it featured in the original Swedish edition, too.
While I am no fan of retro design, a modern one that has strong inspiration from Saabâs roots could go down well with the marketâespecially if the new 9-1 model had some advanced, non-fossil-fuel powertrains.
A car tied to Saabâs roots as an airplane manufacturer could reinvigorate passion for the brand in the same way as the Jaguar mascot unveiling under John Egan in the 1980s. And new boss Victor Muller, CEO of Spyker, has wasted no time getting Saab loyalists excited about the brand again. He has not set his sights on brand-new customers: he wants the old Saab buyers back.
While it might have Opel underpinnings, it at least gets Saab into the European premium compact car game, one which GM denied it, probably due to overlap with its mainstream brands. It was an opportunity missed as BMW, Audi and others broke in to the compact and supermini game.
I know at least one Swede who finds Mullerâs promises exciting, and I sincerely hope to be proven wrong when I expressed doubts about bringing a 40,000-sales-per-year company back from the brink. Below is the announcement of Spyker finalizing its purchase (via Detective Marketing).
When he talks about âDNAâ, Muller really means brand: it will rediscover and redefine that brand and its entrepreneurial spirit, using it to fuel the corporate culture, and having that drive product quality, R&D and other functions. If he succeeds in reaching his 100,000-per-year goal, then we can say that brand loyalty was a huge driver.
His first announcement alone has been praised, Saabâs 100-day plan gives distributors and loyalists some certainty, and the folks in this video actually look enthusedâalready this is not like a tired, Rover-style attempt at getting the company back on its feet, even if the annual salesâ figures are far worse than what the English company had prior to its collapse.
