Wall Street Journal Details Tension Between Li Shufu, Stefan Jacoby

Jun 16, 2011 - 8:55:59 AM

Should Volvo go upmarket or down? More fuel-efficient or more luxurious? Even the two most important men involved can't agree. This past week, the Wall Street Journal published a great article detailing the many disagreements between Geely owner Li Shufu and Stefan Jacoby, Volvo's CEO in Sweden.

The full article is here.

Yes, it has been ten full months since Geely officially took delivery of Volvo and on the surface, not a whole lot has changed. But behind the scenes, there is still a lot of work to be done before the Chinese ownership team and the European management staff see things on the same page. Jacoby has made it clear he'd like to see Volvo remain a builder of safe, honest cars that are slightly premium but not exactly chasing Mercedes-Benz upmarket. The new S60, for example, is offered in the US with a cloth interior, while cars like the BMW 3-series and the Mercedes-Benz C-class are not. Mr. Li, however, would like to see an S-class competitor and a move toward more luxurious appointments to win buyers over in China.

It's "like producing cigarettes," he said to WSJ's reporter. "Smoking is bad for your health, but tobacco companies make and sell cigarettes. The same is true with Volvo," and its need to cater to rich Chinese with super-luxury cars, he said.

Another interesting excerpt from the piece:

The Volvo executives expressed their concern in a meeting with Mr. Li. Mr. Jacoby, fearing the situation could spin out of control, brought Mr. Li and a translator into his second-floor corner office. Mr. Jacoby pressed the point that Volvo needed to proceed judiciously in building manufacturing capacity in China to preserve its quality and its image. "We solved this very much on a one-on-one basis," Mr. Jacoby said in a recent interview. "We didn't want to do this in a big public setting and embarrass one or the other."

It's an interesting look behind the scenes, one we recommend reading through the link pasted above.