A year ago, Wolfgang Reitzle’s job seemed clear — with the collection of luxury brands assembled by his new employer Ford, Reitzle was to carve out a new luxury empire within the world’s second-largest automaker. And so, Reitzle prepared to take his brands —Land Rover, Aston Martin, Jaguar, Volvo, and Lincoln — to California to develop and market a new generation of vehicles for America. And then he and CEO Jac Nasser waited to take on the rest of the luxury-car world.
Now in 2001, Nasser has been ousted as CEO and, on the opening of its new Premier Automotive Group (PAG) office in Irvine, Calif., Reitzle is already fighting rumors that the luxury group will be folded back into the mothership in Dearborn. Too, his division is realizing the difficulty in working out the logistics with the PAG headquarters in London — and in sorting out the politics in a post-Nasser Dearborn.
TCC’s Mike Davis talked to Reitzle on the occasion of the PAG opening in Irvine, and reports on Reitzle’s plans for PAG’s future — including the fetching possibility of a four-door Lincoln ragtop — in an exclusive interview:
TCC: Because of the management changes which took place at Ford beginning on October 30, there is a lot of rumor-mongering going on, among other things concerning you, so if you don't mind, I have to ask an impertinent question -- do you feel threatened by this abrupt change in management?
Reitzle: Sure, Jac Nasser, I was very close to him, he hired me, I had a very good personal relationship to him and he was a great supporter of our strategy. Therefore it is not a surprise to me, when you raise such a question, because when a CEO leaves that his closest people also leave.
But, you know, I am very loyal to the company and I am loyal to the strategy. And I think the strategy is a convincing one, and this principal is independent of the people. And, too, I was very instrumental in creating, in defining the strategy for PAG. On the other hand, I think it is such a convincing strategy what I know from Bill Ford and Nick Scheele, especially from Bill Ford, that he hundred per cent supports that strategy and there is no reason to change.
TCC: So from your point of view, you've just gone from reporting to Jac to reporting to Nick?
TCC: The observation of those of us in the Detroit media is that there seems to be some illogic in your having an office in London, and now with the PAG headquarters here in southern California you're eight or nine hours difference which presents some difficulties in communications at the very least...growing out of that, two questions, why did you set up your headquarters, your office, in London and do you think the changed circumstances might cause you to move to California?
Reitzle: (laughs) No, you know, you have to see, this is beside the Lincoln Mercury global headquarters, it's been (here) three years. It is, we've brought together all our North American sales organizations, nothing else. I mean they have been sitting in different places on the East Coast.
TCC: Right, right.
Reitzle: Now we have them all together in one place. First of all, it is easier for me to fly to one place than to five. My office is closest, it's logistically, strategically placed where you are closest to most of the operations. I mean you have to see we have around 50,000 people, and only 800 out of 50,000 are here. So the main activities where the company....it's not only that I have brands with sales operations, we have five different companies with own manufacturing facilities, PD facilities. These are huge companies and three of them are only one and a half hours from London and one is in Sweden, where you also have from London, from Heathrow, an easy connection. So I can't sit in Sweden I think you would agree, that would maximize my traveling. I will be here probably six times a year for one or two days. I must not be here more often because this has to be run by the sales offices. Therefore, you know I have to be where the center of gravity of our 50,000 people is and where I have the biggest impact in shaping the companies.
TCC: Let me see if I understand the sequence of events. Ford bought Jaguar 10-12 years ago and brought it along, salvaged it, then very quickly acquired Volvo and then Land Rover just in the last couple of years, and I think you came on in '99 or 2000?
Reitzle: Just before we bought Volvo.
TCC: Were you involved in that, in other words was this all one grand plan that you from BMW and Volvo....?
Reitzle: No, I think the Volvo negotiations already had been going on when I joined, Nasser negotiated them, and I only was involved in finishing the negotiations. But I was very instrumental in buying Land Rover because I was familiar with Land Rover before...
TCC: From BMW?
TCC: What about the PAG strategy, had that been formulated prior to the purchase of Volvo?
TCC: So PAG is your baby?
Reitzle: With Nasser.
TCC: OK. Did you present to him or...?
Reitzle: In things like this, it evolves out of discussions, a creative process.
TCC: Coming back to Lincoln and Mercury, and Richard Beattie (L&M's VP for marketing, the number two executive there) was grilled on this just a few minutes ago, there's a feeling, certainly among American journalists, that Mercury has sort of been brushed off....
Reitzle: No, it's a convincing and good stepping stone into Lincoln. First of all, you have to look at it from this point, you have a few thousand dealers, we are totally overdealered, but we have it, OK, and it makes a fast change with Lincoln Mercury by definition more difficult because the most difficult and long lasting thing you can change in the auto industry is the dealer network. It takes much longer than developing a new car. So we do have a dealer network which is not ideal because we have too many dealers. For being really premium you need to substantially reduce the dealer network, what we are doing step by step now. But the dealer network is totally combined, Lincoln and Mercury. Would you tomorrow have no Mercury, 300,000 out of the 450,000-500,000 units, the bigger portion of the volume would go away, the dealers of Lincoln Mercury would fold. So theoretically you would kill Lincoln.
TCC: And of course, Mercury's been profitable....
Reitzle: And over the last years has been extremely profitable. So why the hell should we kill a good position we have. But the position is not clearly defined. The Mercury brand has no clear profile yet and the Lincoln brand profile is not sharp enough and is not consistent enough. Now this will take a while but we are making, maybe you saw from Jerry McGovern some styling models, our future design language for Lincoln, you see already when you look at the Mountaineer, the new one, a certain fresh new design direction for Mercury. So what you will see in five to ten years is two brands, linked to a certain degree in the marketplace through the dealer network but with separate showrooms. You will see two pylons with the signage, two showrooms, so wherever we have a chance we are already doing that now, to separate it. That's a pre-requisite, you don't want to have in one showroom Lincoln and Mercury products and the same salesperson selling it.
Reitzle: We can't shape a brand like that. Now we will have our own design language for Mercury products and the overall idea is, and that's the only area where I'm supporting a certain platform....Why not pick interesting Ford oval products and select those which fit and then make, with a limited amount of money, a nice Mercury out of it. We don't communicate it (well) as a totally different car. I mean a Mountaineer is based on an Explorer but I think when you look at it, it's nicely done. It not only looks different, but also drives slightly different. And you know, when we then also have a fresher young design in the Mercury and combine (it) with always one powerful engine variant, you create a different brand positioning which is then over time positioned between Lincoln and Ford pricewise. Then you will have an affordable American car with a lot of roominess, comfort and a fresh design with its own design language.
TCC: So you are advocating more product differentiation from Ford Division products?
Reitzle: Yes. This allows us to move the Lincoln brand upwards. The price gap we create will be filled by Mercury. That's the strategy.
TCC: What is your feeling, particularly given the Volvo and Jaguar product lineups and your experience with BMW, I hear the Lincoln-Mercury dealers are asking for a convertible, particularly a Lincoln convertible....do you see that in your crystal ball?
Reitzle: Yeah, I can see....we have a plan for a very interesting special convertible. I mean when you look back in the history of Lincoln you see in 1962 a wonderful convertible, a four-door convertible. A four-door convertible would be an interesting solution, wouldn't it be? It would be something which would be unique and different from European efforts. And I think North America will only solve the problems when they focus on own car concepts, when they don't try to imitate the Europeans. I think there are a lot of areas where we can do something for these North American markets, because this market is so huge. It is exactly as big as all European countries together and this is one of the entirely homogeneous markets, knowing that California is different from Florida and Florida is different from Texas, still it is in principal one common market. And I think there is enough marketplace for American brands when they focus on own solutions.
story posted 11/12/01