Too Many Brands? No Way!!!

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I’m re-blogging this post I made 6 months ago because this week’s news is that VW will, within months, overtake Toyota to become the world’s largest car manufacturer. What’s your take on this overtake?

When Alan Mulally succeeded William Clay Ford Jr. as President and Chief Executive Officer of  The Ford Motor Company in 2006, Ford had seven brands. Home grown Lincoln and Mercury; Jaguar, Volvo, Land Rover, Austin Martin and one other…o… yeah, right…Ford! Too many brands, said Mulally. Got to narrow our focus. No, Mulally didn’t scuttle the Ford Focus in narrowing Ford’s focus. But he quickly sold the entire Premier Automotive Group consisting of the four European brands. All at a loss. And for good measure he dumped Ford’s 33% interest in Mazda.

Across the Atlantic Volkswagen group had even more brands than Ford. VW had Audi, Bentley, Bugatti, Ducati, Lamborghini, Man, Porsche, Scania, Seat, Skoda and, yes, VW.

Fast forward to December 31, 2013. Ford is claiming victory for once again Ford outsold all other car brands in America by relying on just one brand-Ford. But now they are finally admitting that they’ve got a problem: they need a luxury brand that sells well; for it’s the luxury cars that attract high margins. Not Fords! And now for the unspoken question: can Ford successfully reposition Lincoln to compete with luxury imports to improve profitability? Since being dumped by Ford, the big cat (Jaguar) purrs differently now. And the naughty new Volvo sold 13.5% more cars last year. Is someone missing someone now?

In all this VW is smiling all the way to the bank. They still have the most brands and make the most profits by far.

So back to the strategy session; for VW’s stated intent is to be the world’s #1 car company by 2016. Still too many brands in the VW paddock? And does Ford have enough to compete?

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4 thoughts on “Too Many Brands? No Way!!!

  1. I’m a person who likes to look at cost vs profit. If one company has more lines than the next, highly likely they will sell more cars and earn more revenue. The real question however is what the bottom line looks like after the expenses have been removed.

    I could care less about how much income there is if the net profit is better than it used to be (in percentage comparison). Am I off-base here?

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    • Wow! Not necessarily off base. However, to answer your question, my preferred approach is to measure both financial and non-finalcial outcomes against strategic objectives that were agreed for the planning period. Why? because it is so easy to record higher profits in the short-term at the expense of long-term sustainability. Balance is key.

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