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From kismet to crash landing

Wolfgang Reitzle had a rough ride at Ford's luxury group

Mark Rechtin

Automotive News | June 16, 2003 - 12:01 am EST

It seemed like kismet. Ford had a collection of luxury and didn't know what to do with them. had just quit as a top executive at BMW and was looking for a job.

Ford Motor Co. long had Lincoln under its belt when it acquired for $2.5 billion in 1989. Ford also had bought in 1987.

Then, as part of his late-1990s remaking of the automaker, CEO went on a major acquisition binge. He was negotiating to buy Car Corp. for $6.45 billion from Volvo AB in 1999. That made four luxury brands under Ford's roof.

As Ford was working on the Volvo deal, Reitzle quit his top engineering post at BMW, having failed to gain board approval for an ascent to the throne.

Reitzle was an industry star, billing himself as a product-development genius. He wanted to run a car company, and Nasser put him in charge of several - but with a lack of autonomy that soon would cause problems. Herding cats

Premier Automotive Group, known as PAG, was a collection of luxury brands meant to achieve product, engineering, cost and creative synergies. It was hoped that Reitzle could align the various products and keep the brands from stepping on one another.

"If Wolfgang hadn't been hired, would Jac have put those brands together as PAG?," asked one top Ford executive, who spoke on condition of anonymity. "I truly don't know the answer."

Keeping the brands aligned would be the equivalent of herding cats. And Reitzle was given another huge challenge: increase the PAG brands' sales to 1 million global units a year, from 646,000 when the group was created.

A big chunk of that gain was to be through Jaguar growing from 50,000 units a year to 200,000. PAG also was to account for one-third of Ford profits by 2005.

But Reitzle soon was awash in problems.

He had a difficult chore in melding the corporate cultures. Lincoln was all about the Dearborn process of creating luxury cars. Jaguar had a traditionally British way of doing things. And Volvo had a middle-management style that was more aggressive and forthright than Ford's.

A major frustration to Reitzle was the restrictions Ford placed on product development. Jaguar had a front-drive rammed down its throat to make the X-Type hit development deadlines - clearly not the elegant BMW

3-series fighter for which Reitzle had hoped. The second-generation X-Type had its platform killed. Also dumped was Reitzle's pet project, the F-Type roadster.

Ford continued its spending on PAG, acquiring Land from BMW in 2000 for $2.7 billion. Ford shelled out most of that cash to get its hands on the just-arriving , which Reitzle had overseen while at BMW. But aside from that, was awash in manufacturing, labor strife and high supplier costs. Lincoln didn't fit

http://www.autonews.com/apps/pbcs.dll/artikkel?Dato=20030616&Kategori=SUB&Lopenr=306160823&Ref=AR&template=printart[12/1/2008 12:29:06 PM] Automotive News

It soon became clear that Lincoln did not fit the PAG equation. Its American-style luxury cars didn't mesh with Jaguar or Volvo. clearly wasn't a luxury , yet it was a PAG stepchild lumped in with Lincoln. Both brands' budgets were slashed, making it even harder to create exclusive vehicles.

On the retail front, Reitzle was examining ways the PAG brands could complement each other. He wanted to combine them at the dealer level, possibly in dealership parks owned by the same dealership group.

While franchise laws in Europe were more lax and would allow such a strategy, most luxury dealers in America were entrenched. Few had all the holdings required to create such stores and, often, their equally well-capitalized rivals had the missing piece of the puzzle.

There also was pressure to hit ambitious volume targets in a sluggish global market. The Jaguar X-Type only was reaching its numbers with subsidized leases in America, and it fell far short in Europe. Volvo was looking at its first sales decline in a decade, and U.S. dealers offered the S40 and V40 for under $25,000, clearly not the portrait of a . Rising pressures

Reitzle was known for joking about the challenges of the job, but it was clear it had begun to grate on his nerves.

During a July 2000 presentation to the press, he showed a picture of a Jaguar car sitting wrecked next to a racetrack, epitomizing their dreadful effort in the high-profile series. He followed that with a slide of a Land Rover broken down in the middle of the desert with a jack underneath, accompanied by the slogan: "The best 4x4 by far." Finally, he chided Aston Martin by saying that it "produced one car every morning, one around noon and one in the afternoon."

Reitzle also had grander aspirations than running PAG. He had lost his best ally when Bill Ford fired Nasser in late 2001. Now he had to report to COO Nick Scheele - with whom he was not on as good terms - and he was chafing under the cost pressures and budget cuts imposed upon him.

Reitzle told confidants that he should be in charge of Ford Motor. When Reitzle's appeal to Bill Ford was snubbed, he quit in April 2002.

It had been a stormy two-year romance, and it was over in a flash.

Ford quickly named Fields, who had rescued , to take over PAG. He could not be more different from Reitzle.

Reitzle was mercurial, Fields methodical. In interviews, Reitzle was famous for tangents, while Fields fell back on Powerpoint-style solutions. Reitzle brought a laserlike focus to product decisions; Fields was criticized for being too analytical. Reitzle was an engineer by trade; Fields was a sales and marketing guy with a Harvard M.B.A.

Fields walked right into a firestorm, as Ford disclosed that the redesigned Jaguar XJ - its high-tech aluminum flagship - would be delayed by six months because of manufacturing difficulties.

The delay would be the cause of a major chunk of a $500 million loss at Jaguar in 2002. But execs backed the play, stating that the car had to be right or else Jaguar could fail entirely should the quality not measure up.

PAG's mission today, according to Fields, is all about "brand focus and business scale."

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Entire contents ©2008 Crain Communications, Inc.

http://www.autonews.com/apps/pbcs.dll/artikkel?Dato=20030616&Kategori=SUB&Lopenr=306160823&Ref=AR&template=printart[12/1/2008 12:29:06 PM]