9 November 2007

Ford Decides to Hold Onto Volvo

It's pretty well known that as part of Ford's continuing review of its brand portfolio (coupled with a relatively urgent need for cash to fund its turnaround efforts), it had considered selling Volvo.

Yesterday, as part of the release of Ford's better-than-expected third quarter financial results, CEO Alan Mulally announced that for the time being, Ford is not going to sell Volvo. Instead, Ford intends to improve Volvo's cost structure and brand positioning. The objective for Volvo in the near term is for it to operate more independently, yet achieve greater efficiency by cooperating with the global Ford organization in purchasing and product development.

Both Volvo and Ford are in difficult positions. Aside from its aforementioned struggles, Ford has depended on Volvo-developed platforms for several of its large cars and crossovers, and an extraction of Volvo from Ford might be difficult while there is so much component sharing. Volvo is struggling with its perception in the marketplace as safe family cars with a touch of luxury, but also of a brand that is a step or so behind the big-name luxury brands such as BMW, Mercedes-Benz, and Audi. Also, the fall in value of the US dollar, coupled with the appreciation of the Swedish Kronor, has made Volvos (all of which are produced in Sweden currently) difficult to price competitively in the US. Volvo's options are to reduce the cost structure (possibly at the expense of any premium image), raise prices (possibly at the expense of sales volume), or hold the line on prices (possibly at the expense of profitability). Speaking of profitability, although Ford does not break out Volvo's results individually, but the company did say that Volvo posted an undisclosed loss in the third quarter of 2007. According to Automotive News, sources close to the company have said that it was in excess of $100 million.

Ford said that just because it decided not to sell Volvo in the short term, it doesn't mean that Volvo might not eventually be sold. Down the road, the focus on improving efficiencies in product development and purchasing might make Volvo's financials look better for a potential buyer, and encouraging Volvo to otherwise operate more independently might make it a more attractive purchase for another buyer.

6 November 2007

2008 Chevy Cobalt 1LT Review

Last week, I was the unfortunate victim of a hit-and-run accident on my way home from work. The perpetrator crossed the double yellow lines in a relatively narrow residential street, skidded along the side of my Honda Accord, and caused $2,643 in damage, not to mention the temporary loss of my vehicle for several weeks, and the permanent loss of its status as never having paint work done on it.

The day after the accident, I drove the car to an excellent body shop about 75 miles from my home (unfortunately, they've had to ply their excellent handiwork on my wife's vehicle about four years ago). This time, however, my loaner car was a brand new 2008 Chevy Cobalt LT sedan instead of a four year old Cavalier, as my wife received in 2004. I'd sat in a few Cobalts over the years, but never actually driven one, so I was looking forward to checking it out. I wasn't looking forward to "trading down" for a few weeks, but such is life.

The Cobalt is not an ugly car. I find it more attractive than, say, a Toyota Corolla, but less attractive than a Honda Civic or Mazda3. Although the Cobalt took the Cavalier's spot in the Chevrolet lineup, it is a completely different vehicle, sharing almost no parts. Looking at it, though, you wouldn't know it. The Cobalt sedan has a very uninspiring style to my eyes. In contrast with the Cobalt coupe - especially in the now-discontinued SS Supercharged trim - the sedan is not the looker of the family. Visually, everything seemed to be properly aligned except for the trunklid - the first time I closed it, it actually bounced back up. The second attempt did latch it, but the gap on the right side is much larger than the gap on the left side. This misalignment may have made it difficult for the latch to do its job.

Opening the door felt like everything was appropriately attached. The seats in the LT model that I have are cloth covered and reasonably comfortable; the cloth felt a little cheap (although I'm used to leather), but the seats have adjustable lumbar support, reclining, and one other knob whose function I haven't identified yet. Once seated, the interior is reasonably appealing, until you begin to touch things. The gauges are surrounded by faux chrome trim, the inner door releases are plastic chrome, and the upper dash in my navy blue sedan is a charcoal gray, while the lower part of the dash is a lighter shade of gray - actually, this is the same color combination inside my Accord. However, the entire dashboard - top, middle, and bottom - is hard plastic with a very artificial-feeling, rough texture. It's also hollow knocking on it yields an echo. The radio, shared with many other GM vehicles, has a CD player with MP3 capability, an auxiliary jack for an iPod or MP3 player, and XM Satellite Radio. (Enterprise hadn't activated the car's XM, but the kind folks at XM were able to temporarily transfer my subscription to the Cobalt for the duration of my time with the car for free). The radio is relatively easy to figure out, and seems to be only a few speakers, a subwoofer, and sufficient wattage away from being a decent one. The rubberized, large volume/power knob was nice to use, although it has a thin plastic, hollow sound, unlike a similar knob in my (admittedly more expensive) Accord.

Interior space is actually very good, at least in the driver's seat, even though I'm 6'4" and 190 pounds. My head is about three inches from the ceiling, which is about the best I can hope for from anything smaller than a Dodge Sprinter, and my knees do not touch the lower dashboard. I find the Cobalt, at least this particular one, to be an interesting vehicle because of the contrasts/conflicts apparent within it. Some parts of the car scream "cheap!" to me, while other parts of the car impart a premium feel. I've already mentioned some of the "cheap" parts; others include the 100% plastic parking brake pull, door panels, a lack of cruise control (though it's available on the Cobalt as a $248 option), a windshield without the blue tinted area at the top, really flimsy sun visors (though they're no worse than our $35,000 Nissan Pathfinder's), no temperature gauge, and no anti-lock brakes (available as a $360 option). The more premium features include the standard XM radio, power windows, mirrors, and locks, remote keyless entry, a woven headliner, a DIC (digital instrument cluster), and automatic headlamps.

As I slid the four speed automatic into reverse to back out of my garage, the car was rolling, but was not engaged in a gear. I looked down to find that what I thought was the detent for reverse was really just extra friction between park and reverse. It's not a very smoothly-acting gearshift, even for an automatic. Once underway, the powertrain (my rental has the 148 horsepower 2.2 liter Ecotec four cylinder and four speed automatic) sounds and feels fine during leisurely driving, but if conditions call for a quick merge onto a crowded expressway, the transmission quickly drops a few gears, the Ecotec screams, and eventually you get to highway speed. Without the benefit of a fifth wheel, the seat of my pants (which is, admittedly, likely to be inaccurate) says that it feels like about 9.5 or 10 seconds from 0 to 60.

Braking feels fine; the car is equipped with front disc and rear drum brakes. Drum brakes are often found on less-expensive cars, but they can be more susceptible to fade with heavy use, but they were certainly adequate for how I'd use the car. The Cobalt was the first vehicle I'd ever driven with electric power steering; the criticisms I'd read of this system are warranted. It lacks feedback and feels unnatural, particularly at low speeds. Still, I do appreciate that its reason for existence is to conserve fuel. The Cobalt handled road imperfections nicely; I didn't push its handling (I'm still a little shell shocked after the hit-and-run, after all), but I don't particularly feel unsafe driving it.

The most surprising thing to me about the Cobalt is that, until GM's cost reductions in the past year or two, they actually lost money on every Cobalt they sold, in spite of the obvious decontenting. Yet, when I think about the 1990 Pontiac Grand Ams that I used to browse at the dealership with window stickers very close to the Cobalt's ($15,955 including destination for a 1LT like this one with no options except for the automatic transmission), with very similar equipment levels, but lacking any airbags, much less dual front and head curtain side airbags - and lacking amenities such as XM radio, automatic headlights, and a digital instrument cluster, the Cobalt seems to be a solid value.

Still, if I were shopping for a compact car, I'd be sure to drive the newer competition before signing on the dotted line for a Cobalt. I really think that GM has proven in the past two years that it can do much better, and I look forward to driving the next Cobalt.