Volvo attacks German strategy
BY BYRON MATHIOUDAKIS | 17th Oct 2011
Speaking to Australian journalists at company headquarters in Sweden, Wim Maes, the president of Volvo Car Overseas – covering some 84 markets – promised that Volvo Australia will never ‘buy’ market share for the sake of meeting sales targets.
“We will not trade short-term volume growth for mid to long term image problems and losses,” he said.
“We are not (here) to gain market share at any price. It’s all about sustainable growth.”Mr Maes said Volvo’s goal is to exceed its German rivals in safety, driveability, technology and electrification, while providing unsurpassed customer care and satisfaction.
“We are targeting the German brands,” he said.
“In the past we have never been a threat to them, but we are coming, and we will be punching hard. We are already punching them hard with the XC60. We have a tremendous engineering capacity.
“We will never copy what the Germans are good at. We will have our own place, supported by product features, supported by our own customer ownership experience, supported by a driving experience, and supported by a lifestyle community where Volvo owners will find their place and be proud of being a Volvo owner.
“And that is changing. In the past we had ‘the bloody Volvo driver’ – that is in the past.
“The Germans are in a stress situation – a little bit panicky, which is good, it is their problem. Let them panic. Let them come with very aggressive tactical offers that dilute the brand and residual values. Let them do that. We are not going that route.
“We are not going to buy artificial sales in the market – to show to you how good we are. We will not do that.
“The Volvo customer in Australia knows that the residual value will remain, and that the manufacturer and the Volvo brand will do everything we can to protect that brand.”Mr Maes has put the onus on Volvo Car Australia to become a key player in his firm’s ambitions to double global sales over the next decade on the back of a massive product blitz and renewed marketing emphasis.
With 400,000 supply-constrained sales earmarked for 2011 – a 30,000 unit rise over last year – the Swedish company hopes to find 800,000 buyers annually by 2020.
Volvo intends to go from a five per cent share of the Australian luxury vehicle market to 10 per cent over the corresponding period.
“This is one of our key growth markets,” Mr Maes said. “Succeeding in Australia is a bit of an obsession because of our history.”Volvo dominated the luxury car market in the heady days of the 1970s and ‘80s, on the back of iconic models like the 200 and 700 series, before Mercedes-Benz, BMW, Lexus and then Audi began to lure buyers away with fresher and more exciting product.
Compounding Volvo’s woes after Ford’s 1998 takeover was what some insiders claim was a ‘compartmentalised’ attitude to the brand, whereby it was not allowed to develop broader-reach models that might overlap with Jaguar and Land Rover.
One executive even suggested that the upcoming ‘C40’ or ‘V40’ five-door small car – essentially a second-generation C30 with five doors and five seats – could only become a reality once Ford was out of the picture, for fear of Volvo offering an in-house rival to its crucial Focus.
The upcoming small car due at next March’s Geneva motor show will at last give the Swedes a bona fide competitor against the established Audi A3, BMW 1 Series and Mercedes-Benz B-class in the most popular class size in Australia as well as around the world.
Pushing environmental as well as technological and safety boundaries, company insiders hope the following wave of new models – including replacements for the existing XC90, V70 and S80 – will help to finally expunge the dowdy and damaging ‘Bloody Volvo Driver’ image that has dogged the marque for decades.
“We will show people who believe that Volvo has not changed with facts and figures,” said Mr Maes.
“We have a target to go from five per cent to 10 per cent in the premium segment we will do that not only through our growing dealer network but through a new brand strategy and of course product development.”He said that recently appointed CEO Stefan Jacoby had brought a new energy to Volvo and had secured $11 billion to develop new products that would enable the company to deliver 800,000 vehicles in 2020, with Australia playing its role in that growth.
Mr Maes revealed that the change at Volvo since Chinese shareholders from the Geely organisation took over from Ford in August 2010 has not only already commenced, but is evident in consumer response to the company.
He also admitted that Volvo was too slow to react to demand for models like the XC60, which is already running at full production capacity.
“We have had five quarters in a row profit – we’ve been growing. And Australia will be up 20 per cent in 2011 at 6000 units (but) we could have done better if we supplied more cars to the market.
“So only positive things have happened since August 2010. Volvo has changed, will continue to change, and it will continue to change at a very high speed.
“But we have not been successful enough anticipating the popularity of the XC60.”Finally, Mr Maes believes consumers are ready for a change from the German luxury car hegemony.
“Cool on the outside but warm on the inside – this is what we are. We believe in that. We are a Scandinavian brand, and a Swedish brand, even more than we were before. And we have a global ambition and a global footprint.
“With 22 years of experience this is an extremely exciting period for Volvo Cars. In Australia we like what we see, and we will continue to invest in Australia. And we will take every opportunity – such as the motor show in Melbourne with a strong message – to continue to surprise.
“That is our ambition. We are writing a new chapter at Volvo Cars.”
