Volvo Cars North America CEO Doug Speck: an end to uncertainty.
There are few things more unsettling than uncertainty, but for the last year that was a way of life for the folks at Volvo Cars as they waited to see whether Ford Motor Co. would sell the Swedish brand and, if so, who would buy the company. The answer came, recently, when Ford completed the sale of Volvo to the ambitious Chinese automaker, Geely.
For the moment, at least, Geely plans to operate its new subsidiary as an effectively independent brand. But what the long-term plans and prospects are for Volvo remain to be seen. Nonetheless, the future looks a fair bit brighter than it has for awhile, contends Doug Speck, the head of Volvo Cars North America.
Speck is staying with Volvo as it switches from U.S. to Chinese ownership, formally terminating his ties to Ford, which he called his corporate home for 26 years. TheDetroitBureau.com recently caught up with the executive and asked him about the sale and Volvo’s future prospects.
TheDetroitBureau: You must be relieved to finally have the protracted sales process wrapped up.
Speck: There are a few good things about this, and one is that we now know our ownership situation after 18 months of uncertainty. I, for one, am very optimistic about this. We’ll continue to operate out of Scandinavia and will still be building Swedish products…operating as an independent group under a holding company.
TDB: How much different is this from your situation under Ford? Why didn’t that relationship work?
Speck: Some of the problem (with being part of Ford) was timing. Ford’s financial health didn’t help. It wasn’t something Ford did to Volvo, but the fact that Ford was struggling with its own business. We wound up struggling with a lack of sufficient resources.
TDB: So, what’s better about the new situation under Geely?
Speck: We’re a small car company and I think we’ll enjoy Geely’s entrepreneurial spirit. I really think this new ownership situation will be great for us. One of (Volvo’s) problems is that our home market, Sweden, just isn’t that big compared with Germany, which is a big market for a Mercedes or Volkswagen. You could now argue that we’ll have two home markets, with China, and that will create a significant advantage for us.
TDB: Do you foresee any drawbacks?
Speck: Well, when you look at the combination of both Volvo and Geely, you’re still only talking (annual) sales of 600,000 to 700,000 vehicles. So, compared to our relationship with Ford we’ve got a lot less scale. We have to make sure that doesn’t turn into a disadvantage.
TDB: There’s been some speculation the new owners might want to form additional joint ventures or partnerships.
Speck: It’s premature to get into that speculation but something is inevitable. The nature of the industry (today) is that it would be inevitable you’ll see more of these.
TDB: Is that likely to involve some sort of hybrid project?
Speck: Volvo is already working on our own hybrid solution, which will be coming to market by 2012.
TDB: Right now, you produce vehicles in Sweden and Belgium. Might other locations be added under Geely?
Speck: We’re evaluating the need for manufacturing in China, which we would use to service the Chinese market.
TDB: The U.S. is expected to remain a critical market for Volvo. Might we finally see the company also add a production plant here?
Speck: In the short-term, no.
TDB: From your position, as head of Volvo Cars North America, what might be changing?
Speck: We really need a good, strong, competitive range of products, sedans and XC models, and a very competitive range of powertrains. We also need more marketing dollars. Beyond that, I don’t think we have to dramatically change our direction.
TDB: And the company’s overall strategy, now with your new owners?
Speck: I don’t believe we have to dramatically change our direction. Our first challenge is to protect our safety leadership and then add to that more fun-to-drive technologies. I don’t see a new to change our strategy.