Guys, I wanted to interject here because I have a lot of interview experience
BUT NOT ENOUGH EXPERIENCE TO RUN A RECORDER.
We run our interview recordings on an older iPod Video hooked up with a Griffin high def mic. It's a not the most state of the art setup, but it is very compact and does quite well at picking up interviewee voices even in loud environments like auto shows. The mic doesn't work on newer iPhones and this show was the first time we'd used it since doing an OS upgrade from Apple. Apparently there are bugs that include it showing that it's recording but not showing the time recorded. I'm an experienced interviewer (check YouTube, Audi of America has used me on a few occasions), but I'm not an expert on the nuance of Apple iPod software upgrades and mistakes happen.
This is a good example though of only having part of the picture and drawing a very critical yet not terribly informed conclusion.
and also because I've known John Maloney since before the P2 R era. He's a good guy and, though he's ex-Ford, he's one of the most enthusiastic Volvo execs I've ever met... enthusiastic for the Volvo brand. He's owned multiple Rs and is a huge proponent of Volvo's motorsport endeavours from the At Speed Racing days until now. He's made all of that happen.
HE'S MADE EXACTLY WHAT HAPPEN?
Well I'm not privvy to all of his daily routine or his resume at Volvo so I'll keep it short to what I know that effects enthusiasts. Placement of Volvo a number of years at SEMA including support for the then new to the market Evolve cars. The red SEMA car that year was John's daily driver. Product planning was under him while he was at his marketing gig, so manual transmission P2 Rs in a market where manual gearboxes take a leap of faith. Ditto for T5 AWD MT6 S40/V50. Need more examples?
So first, an admission. We had to re-create about 3/4 of this conversation as we had a recorder malfunction that was my fault. Remembering the conversation between those of us in the room, we recreated the questions and John and the PR person in the room were patient and kind enough to recreate the answers.
SO MUCH FOR ANY SEMBLANCE OF JOURNALISTIC INTEGRITY. THE INTERVIEWEE AND HIS PR PERSON GET TO RECONSTRUCT THE ANSWERS.
This is Swedespeed... a Volvo enthusiast website. I'm not Edward R. Morrow and doubt we're in the running for expose of the year here. We covered what we covered and we went back and rebuilt. We'd lost the diesel discussion and a lot of product talk and thought it was a shame not to run it. The folks at Volvo did an admirable job helping us recreate it and since two of us from this site were in the room, we had a pretty good memory of what was discussed. If you don't like it you can go find another website that provides this sort of access and coverage of the Volvo brand.
As such it may read a little more manufactured than the natural flow of conversation but the content remained.
On the content, here's the challenge for guys like John. VCNA is effectively an importer. They're a large importer, but an importer.
I THOUGHT THEY WERE A SUBSIDIARY. PART OF THE COMPANY. NOT SOME THIRD PARTY.
I think we're debating terminology here. I work with U.S. "subsidiaries" of car companies daily, specifically Volvo, Audi and VW. More of their jobs are about monitoring market trends, demands and living by market-specific regulations. It's rare that an import market dictates product at a high level but it does happen. This has always been a struggle though and even in days when the USA was THE largest market and the home market to the parent company (then Ford). Regardless, I don't think your use of a different term than mine really signifies anything revealing.
I'm not privy to the specific level of say that they have but usually this means high level product strategy takes place in the home market (or maybe China now as well) and that high level strategy such as 4-cylinder hybrids being the new push now is something that likely isn't even a decision for him.
WHAT IS YOUR BASIS FOR SAYING VCNA HAS NO 'INPUT'INTO THIS DECISION. THE US IS VCC'S LARGEST SINGLE MARKET AND THE "IMPORTER''HAS NO SAY. HARD TO BELIEVE. IF YOU ARE CORRECT IT IS DAMMING, THAT VCC WOULD MAKE SUCH DECISIONS WITHOUT INFORMATION FROM THE US MARKET.
You're talking in dramatic opposites here. I'm saying they likely (because I don't know for sure) don't have much say in that high level strategy. You're suggesting there is no research or insight into the North American market as a result. Given Doug Speck just took that post in Gothenburg and Jacoby (who I also have worked with at VW) isn't familiar with the North American market when he ran Volkswagen America for several years in his previous job suggests they've got a pretty good read on North America.
Diesel may have been a market decision but also covering the Audi beat I know some of the costs that go into this analysis.
WHAT ARE THE COSTS YOU ARE TALKING ABOUT? BE MORE SPECIFIC.
Google BIN 5. I'm not an engineer so will leave that to the search engine but basically this is an exhaust particulate standard set in place for the U.S. market. Small light cars with small engines (Jetta TDI, Audi A3 TDI) meet this without urea but when you put that engine under load in a heavier car or you introduce a larger engine such as the VW/Audi 3.0 TDI in the touareg and Audi Q7 then you need to develop a whole urea injection system including tank, refill system, support at dealerships for re-fills and servicings, etc. This is a considerable cost, even for the larger Volkswagen Group who is pushing the costs of the development of this system out over many models for higher volumes and thus higher economies of scale. Currently this includes Touareg TDI and Q7 TDI, but it will also soon include A6, A8, Q5 and Porsche Cayenne. The Volkswagen Group has any number of TDI engines including a cool 4.2 TDI V8, an exotic V12 TDI, a new 3.0 V6 TDI biturbo etc. and none of these have come to the States because of the additional cost of development of the system unique to each engine. I don't have a dollar value and likely that's not something any of them care to share.
So now you're Volvo and you're considering the D5. You need to account for that and then plan it into models. You could put it in the XC60 and S60, your two highest volume models, but you have a hybrid drivetrain on the way that is likely more fuel efficient and does not require the urea injection system nor even federalization of an (old) new-to-us engine. A new 4cyl turbo GDI petrol will need to be federalized but volumes can be pushed out over both the hybrids and all of the petrols that will use it. This means less federalization costs and less complexity in the parts distribution system.
There are more details but this is getting a bit long and I think I've adequately made the point.
To run a diesel in America and meet BIN5 requirements you need to do some sort of urea injection. Smaller cars with 4-cylinders may not need this but larger and heavier cars or larger engines do.
ARE YOU SAYING VOLVO IS "LARGER AND HEAVIER" THAN THE AUDI AND VW?
I'm not sure where it weighs in but I suspect so. My understanding of A4 with the 2.0 TDI (in the planning for Audi of America) was close to maybe needing it due to the added weight of its installation in the larger A4 chassis. I don't recall the result in this case, whether they were able to go without it or not. That said, if the smaller displacement 2.0 TDI in the A4 fwd (larger but also lighter than the S60) was borderline then most likely a D5 in an S60, XC60, XC70, S80 or XC90 would require it.
On one hand, the Volvo D5 is one engine that [THEY] could develop and install in all of their product. Even still, there's no guarantee of success and now that they're not at Ford they can't apply economies of scale across large volumes as Audi does.
ARE YOU SUGGESTING AUDI HAS A GUARANTEE OF SUCCESS?
Yes and no. Volkswagen had already been selling diesels in the US before BIN5. They had an existing clientele for Jetta, Golf and Touareg. It was thus easier to model out the product volumes. BIN5 required them to cut back variants and drop the old PD V10 TDI. They narrowed it down to just the 3.0 TDI and even the Cayenne will be limited to this number even though a more compelling enthusiast Cayenne or Q7 would have the 4.2 TDI or the V12 TDI. The market just won't bare that in the USA and 3.0 TDI, again, was more easy to plan given the existing VW business.
So what I'm saying is that if Volvo and Ford worked together to federalize a diesel (D5 or whatever) for say the Focus, the Transit Connect, the new Escape, even the Explorer, then these two companies could spread the cost out over much higher volumes. Volvo no longer has this luxury though since they're now on their own.
The VW/Audi 3.0 TDI goes across the VW Touareg, Audi Q7
THESE ARE THE LARGE VOLUMES YOU ARE REFERRING TO?
As compared to what? They are volumes. Volvo has not had diesel product in market in many, many years. They'd be starting anew without any existing business as VW had. This involves risk and when your job revolves around sales success, you minimize risk and go with what is a better seller in market. I suspect you, me and maybe John might prefer a D5... or maybe even a D5 hybrid (might be cool), but the market won't bear the premium and the market has a higher volume track record in hybrids. That's unfortunately the reality that these guys face. Lack of happiness by you or by me is less a measure of success, unlike sales volume which is critical.
WHAT ARE YOU SAYING? ARE YOU AGREEING WITH THE DECISION NOT TO BRING DIESEL TO NA?
That's a loaded question. I own a Touareg TDI. I know where my tastes are and I'd love an XC60 D5 R-design. That's my taste. I also work in the industry and I know where the market is going. I know the pressures they're under and the resources they have at hand. If my job security were based on moving product and bringing volume back so the brand has the luxury of then later doing niche models... then I'd go hybrid as well. I have the luxury of being simply an enthusiast though, and as such I prefer R cars and diesels.... even better diesel R cars.
WHAT IS THE BASIS FOR YOUR ASSUMPTION THAT IT WOULD BE "VERY HIGH COST PREMIUM" ESPECIALLY SINCE YOU DO NOT EVEN KNOW IF IT WAS MODELED OUT.
I don't know for sure that it was modeled but the answer is pretty obvious. I'm sure they looked at what they had on hand and modeled costs of further developing this versus developing other new solutions. You can look at the premium of say a Touareg 3.0 TDI vs. a Touareg 3.6 V6 petrol in the market and compare like versus like... say mid-level Lux models (what I have). Now add a bit for development and also OE supplier purchasing costs to that since volume would be lower for Volvo. There's your basic estimation of a premium. So add that to the XC60 or XC90 you might buy. How much more volume do you think that would bring Volvo? Now compare the number of diesels in the given segment versus hybrids.
That stinks, but it's the basic thing that these guys model out and mull over.
AND WHAT IS YOUR BASIS FOR THAT?
I actually really identify with the product guys. They (and also the designers) are usually the most easily identified car enthusiasts in the room at the events we attend. John managed product directly when he was in his marketing position, and others like Art Battaglia directly in product planning are likewise car guys. Same goes for the product planners at Audi and VW with whom I also interact. They love to do it, hands on, but to be good at what they do they need to recognize and work around the challenges.
Hybrids sell better in the USA and there's no BIN5 requirement on the production of a hybrid. More than likely VCNA and VCC people were involved in modeling this out and the safer bet was larger market (hybrid) and lower investment to bring to market (petroleum).
WHAT WAS THE BASIS FOR YOUR "MORE LIKELY"?[/b]
I'm speculating. It's an educated guess. No one's told me anything directly in this matter but I've got 10 years in the business of automotive journalism.
Last, on John. He IS an enthusiast. When he has time, John does read this site. He doesn't post, but rest assured he reads this and that is something most car manufacturer presidents can not boast of. Likely some comments in here do frustrate him but more likely (if I were him) I would be frustrated by the lack of direct understanding of the market pressures these guys are under.
HE HAS A VERY SYMPATHETIC AUDIENCE. IF IT DOESN'T UNDERSTAND, HE HAS NO ONE TO BLAME OTHER THAN HIMSELF.
GIVE HIM ANOTHER INTERVIEW.
I'd argue he has a much less sympathetic audience here... like minded in enthusiasm but not in viewpoint. This audience is extremely enthusiastic and this audience has very strong ideas of what the Volvo brand means to them. The Volvo brand is dear to pretty much everyone on here and as such deviation from what makes it great to you or to me will draw often passionate criticism. If I ran Volvo I'd make my own changes, rebadge R-design to R (and fit them with Brembos), push shifter paddles on autos across the line, add DSG manumatics and implement XWD torque vectoring from Haldex. I'd bring more wagons. I'd bring diesels. I'd bet that that would make a lot of people on here very happy because I'm like minded... but I'd also spend very limited resources on cars that don't sell in high volumes and I'd probably get fired as a result. Therein lies the disconnect. I understand the challenges he's facing and I believe he deserves the respect and benefit of the doubt, understanding he can't just build the cars he'd love to build. They're a business and long-term success of Volvo means more specialty product in the end.
I experienced something similar at Audi. There's been massive simplification of engines and transmissions, also models. Wagons are out and Audi enthusiasts aren't happy about it. Manual transmissions have been dialled back. Again, enthusiasts complained. However, sales have turned around and are now growing into record territory and as a result more diesels are coming and more high-performance S and RS cars are coming. Smart planning pays dividends.