Built atop the Golf’s chassis, the new Octavia was, thanks to van Braeckel, bigger, roomier and cheaper than its Wolfsburg cousin. Soon taxi firms across Britain and the Continent were changing to the new Octavia, which was not only unusually well appointed but also boasted a cavernous boot. Meanwhile, the Octavia’s ‘hot’ vRS variant, which offered the Golf GTi’s performance at a fraction of the price, won Europe-wide critical acclaim and droves of enthusiastic buyers. By 2001 Škoda felt confident enough not only to make the vRS more widely available but also to give the old Superb name the exposure it was denied in 1939. The new Škoda Superb, based on the platform of the VW Passat but, in the mould of the Octavia, more spacious and better equipped than its VW parent, sold slowly at first, but by 2010 was doing surprisingly well across Europe and finally coming to the attention of critics who had dismissed it as merely a cut-price Passat.
Volkswagen’s successful management of Seat and Škoda had not gone unnoticed by its rivals. In October 2005 Mercedes bought an 18.53 per cent stake in VW, which was countered the following year by Porsche, which bought a 25.1 per cent ‘blocking minority’ stake. In 2007 Porsche increased its stake to 30.9 per cent, while assuring the world’s media that it did not intend to absorb Volkswagen and was merely protecting the fabled car maker from hostile bids. But Porsche was, of course, bluffing; by January 2009 the sports car manufacturer had acquired a 50.76 per cent holding in Volkswagen AG and the following May the two companies merged.1 Subsequently, it turned out that Porsche had bitten off more than it could chew. With the recession of 2008–10 decimating worldwide sales of sports cars and premium SUVs, Porsche found itself in financial trouble. The tables were turned, and in the event it was Volkswagen that acquired Porsche, rather than the other way round.
Volkswagen, newly secure after its merger, now declared that it aimed to become the world’s number one car maker by 2018. Bolstered by the addition of Porsche’s upmarket products, VW also affirmed that it sought to achieve goal that by competing in all market sectors. The group built two new factories in China and began to collaborate with the Chinese government on research and development projects. It also began to think more about the needs of its American customers, offering modified versions of its cars through its US dealers.1 (Thus the new American Passat of 2011, made at Chattanooga in Tennessee, was both longer and wider than its European sister.)
At the same time, the German giant resolved to pursue a bolder model strategy. VW redesigned the retro New Beetle, ensuring that the revamped 2011 version was far less cute and feminine than its 1998 predecessor, and introduced the Up! to replace the mediocre Lupo/Fox city car in the market that BMW’s new Mini had astutely exploited. The Up!, as its novel name suggested, was aimed at the younger market. Its flexible platform could be adapted to make a mini-MPV; an Up! Lite diesel-electric hybrid was planned; a longer Blue variant was developed, which could incorporate a smorgasbord of alternative fuels (its glass roof carried a solar cell, lithium batteries lay beneath the floor, and there was even space to stash a hydrogen fuel cell); and VW also planned an all-electric E-Up!2
The Up! was designed by another of VW’s new acquisitions, styling chief Walter de’Silva, celebrated for the beautiful, award-winning series of Seat saloons he had created from 1999. On arriving at Wolfsburg in 2007, de’Silva announced that he would henceforth ban the ‘excessive decoration and over-design of models’ (hardly the design qualities with which VW had been historically associated) and would concentrate on a ‘clean and precise’ brand look. ‘VW design has to be distinctive,’ he said, ‘because VWs are world cars that everybody understands and recognizes as VWs.’ Yet while de’Silva focused on revamping the Volkswagen model range, the VW group’s jewel in the crown continued to be the Audi marque, which by 2010 was contributing nearly 50 per cent of its profits, even though it sold only a quarter of the vehicles of VW’s car division. It is an established axiom of motor manufacture that luxury models, if they sell well, make far more profit per unit than economy cars; thus Lexus, Acura and Audi all contribute a disproportionately large proportion of the profits of their Toyota, Honda and VW parents. In all three cases, the lessons learned from the mass production of smaller cars have been applied to their premium ranges. By 2011 VW’s Audi division was making more profit per car than either BMW or Mercedes.
Volkswagen was not the only European car maker that began to harbour dreams of world domination. In 1999 Renault, privatized by the French government three years earlier, took a 44.4 per cent stake in Nissan to create the world’s fourth-largest car maker. In 2006 Renault-Nissan even proposed to absorb GM, but the affronted Americans turned the project down – only to stare bankruptcy in the face two years later.
The driving force behind the new, intensely ambitious, combine had, by 2005, become CEO of both Renault and Nissan. Carlos Ghosn’s career path was far removed from the traditional engineering or accountancy route followed by most motor executives, while his multinational ancestry neatly reflected the global business that car making had become. Born in Brazil in 1954 to a French mother and Lebanese father, Ghosn was educated at a Jesuit school in Beirut, a lycée in Paris, and the illustrious École Polytechnique at Palaiseau, graduating from the last with an engineering degree in 1978. He spoke six languages fluently, including English, Arabic and Japanese, and became as familiar in Japan, where he became the hero of a manga comic book series, as in Lebanon, where he was hailed as a potential presidential candidate. Having spent eighteen years with Michelin, where he ended up as CEO of Michelin North America, based in Greenville, South Carolina (where he still has a home), he joined Renault as executive vice president in 1996 and, three years later, was parachuted into Nissan.
Not all of Ghosn’s new Renaults were a success. Encouraged by his CEO to be radically original, Patrick le Quément developed two bold new models for 2002, the Avantime and the Vel Satis. The Avantime was a bizarre, coupé MPV which featured four huge seats (the rear two raked higher than those in front), massive doors and a bizarre, inverted tail. But its unorthodox looks were also accompanied by unreliable performance, and production was stopped after only two years. The bizarrely named Vel Satis was slightly more successful – but only just. Intended as Renault’s new flagship saloon, it sat unusually high and combined a bland front end with an inverted, Avantime-style stern. The Vel Satis not only looked ugly (Renault later alleged that it had intended to attract ‘less conformist’ customers who ‘distanced themselves from the conventional saloon’), but also rode poorly and handled clumsily. Sales were accordingly dismal. Facelifted to look more conventional in 2006, the Vel Satis was finally axed in 2009.
Renault’s traditional rival, Citroën, was safe from the merger wars of the 1990s, having been bought by Peugeot in 1974. But it seemed to lose its way during those years, failing either to build on its historic reputation for daring innovation or to rival the sales of impressive Peugeot models such as the 205 and 207 superminis. The Citroën BX of 1983 was the last vehicle to incorporate the firm’s celebrated pneumatic suspension, and subsequent Citroën models became ever more bland and mediocre. The large XM saloon of 1989, intended to rekindle the magic of the DS, was unreliable and performed disappointingly, while its oversized, wedge design was neither attractive nor advanced. In 2009 Citroën announced it would apply the renowned DS label to a series of high-specification variants of existing models, which would themselves be developed from recent concept cars. The DS3, launched in March 2010, was based on the new C3, and the DS4 and DS5, both of 2011, were intended as premium, high-spec versions of the C4 and C5 ranges, respectively. Many critics, though, accused Citroën of tomb-raiding, and overpriced and over-styled models such as the DS3 received decidedly mixed reviews at their launch. Knowing references to past successes are all very well, but attempting to appropriate the celebrity of classic cars such as the Citroën DS is an exercise that is inevitably fraught with danger. BMW and Fiat have proved you can get it right, with the Mini and the Fiat 500, but many oth
er car makers have fallen disappointingly short.
At least Citroën survived. Other, equally famous but less fortunate, motoring names became sorry victims of the era’s mania for acquisition and merger. Top of the list was the historic Swedish car maker Saab, which in 1989 entered into a partnership with GM, but by 2000 found itself wholly owned by the American leviathan. GM never seemed to formulate any real plan for Saab other than the desire to incorporate the Swedish firm into its Opel subsidiary. New Saab models were built on Opel platforms, and Saab production was gradually shifted away from Trollhättan to Opel’s Rüsselsheim factory. In America, a half-hearted attempt in 2005–6 to sell rebadged Subarus and Chevrolets as Saabs failed disastrously.1
When GM itself hit the rocks late in 2008, one of its first announcements was that the Saab marque was ‘under review’. The only buyer GM could find by the target date of December 2009 was the Dutch niche car maker Spyker, led by the dashing Dutch lawyer and entrepreneur Victor Muller. Unsurprisingly, neither Muller nor his Spyker colleagues possessed the financial resources to make a success of Saab, let alone to expand into China and build a new US headquarters, as were optimistically promised. Muller’s recruitment of Russian banker Vladimir Antonov as his principal backer merely added to his woes; in July 2011 the European Investment Bank rejected Antonov’s bid to become part-owner of Saab following allegations that he was involved with organized crime.1 Meanwhile, Saab’s new cars of 2010 (which still bore a marked resemblance to the classic, wedge-shaped Saab 99 that Sixten Sason had designed in 1967) were underwhelming; while the GM-designed platform of the much-vaunted 9-4X of 2011, Saab’s first-ever SUV crossover,2 would not, Saab belatedly discovered, be able to carry a diesel engine, thus making European sales almost impossible. Early in 2011, the overstretched and beleaguered Victor Muller announced he had agreed to sell his sports car operation to ‘focus on Saab’.3 But the Saab operation continued to unravel. In April 2011 several suppliers halted shipment of components to the Trollhättan plant because of unpaid invoices and Saab had to stop vehicle production. In May 2011 it was reported that the Dutch owners, lacking the money to invest in a new range of cars, were being forced to sell 29.9 per cent of Saab to Chinese SUV manufacturer Hawtai, in return for a cash injection of 150 million euros. Yet Hawtai never signed the deal, and Muller was forced to hawk the company around China like a used pram. He approached both Great Wall Motors, a company hitherto known for its suspiciously Fiat-like city cars, and Pang Da, China’s largest dealership network; and on 16 May announced that he had signed a memorandum of understanding with Pang Da which would give Saab the financing it needed to restart manufacture. On 27 May Trollhättan’s assembly line restarted – only to stop again a few weeks later when spare parts ran out and the firm admitted it could not meet its monthly wage bill.4 On 19 December 2011 Saab filed for bankruptcy with the Swedish government. A long and illustrious corporate history had limped to an ignominious and humiliating conclusion.1
General Motors’ shabby treatment of Saab deserved all the worldwide condemnation it earned. But by 2008 the car giant’s own status was almost as precarious as that of its Swedish subsidiary. In 2001 GM had recruited veteran motor executive Bob Lutz to rescue the ailing firm. When Lutz arrived, GM was producing bland cars, cutting corners wherever possible, and consistently losing market share and sales to the Japanese and Germans. Lutz now prioritized design, for the first time since the 1960s. His restyled Chevrolet Camaro consistently outsold the Ford Mustang, while his Saturn Aura and Malibu won North American Car of the Year awards in 2007 and 2008, respectively. Lutz also lobbied against government fuel economy rules and rubbished hybrid-electric cars – until he saw the sales and public acclaim that Toyota was generating with its Prius. Thereafter he gave his full backing to GM’s electric car programme, an initiative that saw the launch of the Chevrolet Volt hybrid in 2010.
On his retirement from GM in May 2010, at the age of seventy-eight, Lutz buzzed downtown Detroit in one of his own decommissioned military jets, provoking a dramatic response from the emergency services and garnering media headlines the next day. Even his biggest fans thought that this typical act of macho bravado was sadly inappropriate and served only to demonstrate how out of touch GM’s senior executives were with their customer base. For just eleven months earlier, on 1 June 2009, General Motors had filed for bankruptcy. The company that had dominated the global car industry since the mid-1920s was finally on its knees.
General Motors was, as its management hoped, saved by the US government. The incoming administration of President Barack Obama decided that it could not face the enormous job losses that the wholesale collapse of GM would entail, and accordingly bought a 61 per cent slice of the humbled auto goliath on behalf of the American taxpayer. But the federal authorities also forced GM to disgorge many of the marques that had made it famous, including Pontiac and Dodge, as well as many of its recent acquisitions, such as Saab. At the same time, GM announced it would be closing a number of plants, among them the historic Willow Run complex in Detroit, which the company had owned since 1953. Most humiliatingly of all, GM’s Hummer brand, so redolent of American military might and machismo, was offered to the Chinese – who, on closer inspection, turned the proposal down flat.
GM’s Hummer had been derived from a hefty, armoured military transport, the Hum-Vee, for which AMC had been contracted in 1983. According to one (possibly apocryphal) story, the film star Arnold Schwarzenegger had seen a convoy of US Army Hum-Vees while shooting a film and asked for a civilian version to be made for him, with air conditioning, a modern sound system and comfortable seats. In 1990 two civilian Hummers, as they were popularly known, were driven from London to Beijing, while the original Hum-Vee served prominently in Operation Desert Storm – the allied invasion of Kuwait – a few months later. Fortified by this incomparable publicity, a civilian Hummer became generally available from 1992, and from 1999 was marketed and developed by GM. However, rising oil prices put an end to this absurd fad; by 2005 even movie stars were abandoning their Hummers for Priuses or, at the very least, eco-friendly SUVs. When no buyers could be found, the Hummer marque was dissolved in April 2010.
Like GM and Chrysler, Ford was also tried to amass a global empire in the 1990s. Alongside the many parts manufacturers and repair businesses it bought (including Europe’s high-profile Kwik-Fit chain), Ford acquired Jaguar in 1989, Aston Martin in 1994, Volvo in 1999 and Land Rover, from BMW, in 2000. Just one man was responsible for most of these purchases: the Lebanese-born Australian Jacques Nasser. Emphatically not one of the Ford clan, nor one of the colourless accountants who had dominated the company since Henry Ford II stepped down, Nasser was keen to establish Ford as the world’s dominant force in motor manufacture. By 2002, however, almost all of his empire had been dismantled and the company’s ambitious international strategy lay in ruins.
Jacques Nasser was chairman of Ford Europe at only forty-one, and president and CEO of the whole Ford Motor Company by 1999. He was particularly identified with the Premier Automotive Group (PAG), the new division that he created to manage the new, upmarket brands he had recently bought. But PAG never reached its ambitious sales targets and, as Jaguar and Aston Martin failed to recoup Ford’s massive investment, PAG was increasingly viewed by Nasser’s colleagues as a costly mistake. Jaguar, in particular, was clumsily handled, with millions of dollars being spent on extending the Jaguar brand to a Formula 1 racing team, which then proceeded to haemorrhage money without earning its sponsor regular podium places. Meanwhile, the exciting new Ford Thunderbird, introduced by Nasser himself to dealers in a fanfare of publicity in 1999, did not reach Ford showrooms as a production model until 2001.
Nasser also faltered on what was regarded as Ford’s home ground. The Ford Mondeo, launched worldwide in 1993, had been touted by Dearborn as the world’s first genuinely global car. Developed on both sides of the Atlantic, and made in Belgium for the European market, it replaced the Sierra in Europe and the Telstar (a Sierra
equivalent) in Asia, and revived Ford in Europe at a time when fleet sales were regularly being lost to Vauxhall/Opel.1 But in North America, the Mondeo’s equivalent, the Ford Contour/Mercury Mystique, shared only a few elements with the Mondeo, such as its windscreen, front doors and rear. Marketed as a family car in Europe, the Mondeo was still judged by American customers to be too small; America (and Australia, too) preferred the larger Ford Taurus or Falcon, and thus the Contour/Mystique sold disappointingly there. (Interestingly, the BMW 3 Series, which was the same size as the Contour/Mystique, sold well in the US.) In 2000 Nasser accepted the inevitable and abandoned the pretence that the Mondeo was a world car. A sharply styled and much larger Mark 3 Mondeo was offered to Europe, but North America and Australia were presented with the even bigger Fusion.1
Nasser’s exciting new initiatives were now starting to look more like unpardonable mistakes, and his power base within the company was gradually eroding. Having refused to testify in a congressional hearing to investigate the tendency of the new Ford Explorer SUV crossovers2 to roll over in the event of a tyre failure, Nasser soon regretted his decision and attended, but then caused serious offence in the Ford family when he heaped blame not on Ford’s car but on the Firestone tyres with which the Explorer was fitted.3 The two companies had been dynastically intertwined for decades, and the mother of William Clay Ford, the senior family member then in the firm, was a Firestone. In 2001, with Ford facing huge annual losses of almost £2 billion, Nasser was removed from the summit of the Ford Motor Company and replaced as chairman by Bill Ford.
Life of Automobile, The Page 42
