V8 racing tilt boosts Volvo car sales

VOLVO’S foray into V8 Supercars is paying serious dividends, with the Swedish brand recording double-digit sales growth in Australia for its S60 and V60 mid-size range following its local racing debut.

Volvo has lined up on the grid this year against Holden, Ford, Nissan and Mercedes (the latter via Erebus Racing) with a pair of S60 racecars developed in collaboration with the car-maker’s Polestar tuning arm and Garry Rogers Motorsport.

At the midway point of the racing calendar, S60 sedan sales have risen 62.6 per cent for the first five months of the year with 296 new registrations, compared to 182 over the same period last year.

Volvo Car Australia managing director Matt Braid told journalists in Melbourne last week that there was a strong business case for the brand to join the V8 Supercars, and the rate of enquiry its dealers receive following race days has proven that.

“Since literally the weekend of the Clipsal 500 (February 27 to March 2), our enquiry rates have mostly doubled since our pre-racing days,” he said.

“We track that weekly and, if you take out school holidays, there is a spike in enquiry the week after every race meeting we have been at this year.

“It is tracking that directly, which we didn’t anticipate. We knew it would help, but to have that direct correlation of ‘race on Sunday, sell on Monday’, that surprised us.”

The brand still trails its competitors in the mid-size over $60,000 segment by some margin, with the Mercedes-Benz C-Class leading on 2079 sales to the end of May.

BMW’s 3 Series is in second place with 1710 sales and the resurgent Lexus IS sits in third at 1192 units so far, ahead of the ageing Audi A4 on 1075 sales.

Mr Braid said that while the renewed interest in the brand was welcome, the company sees more opportunity for growth in the small yet competitive luxury mid-size segment.

“The sedan segment is the largest segment we play in and we have plenty of blue sky above us for what we want to achieve with S60,” he said.

“We are very pleased it is moving in the right direction, but we are also getting very greedy that we would like even more than that, given what is available in that segment.”

The upswing for the range includes a boost for the S60’s station wagon twin, the V60, which in year-to-date sales is up by 47.1 per cent to 103 sales.

Mr Braid conceded that Volvo did not market the wagon as heavily as it does the S60 sedan, but that it would get a boost with the arrival of a Polestar performance variant early next year.

“The wagon segment is relatively small and we are going okay in it. There is opportunity with everything we are doing, so I don’t want to say we are happy with where everything is and we can rest on our laurels. But V60 is growing along with S60 and the V60 Polestar is very exciting because it will potentially put another halo on top of that as well,” he said.

“We would be selling ourselves short if we pushed V60 too much because there is not that much space in that segment to achieve the volume we need to achieve.”

Mr Braid said he was particularly pleased with the response to the V40 small hatch that arrived in Australia early last year, but added that it, too, could be pushed further, particularly given the sales results of rivals in the segment including the Mercedes-Benz A-Class and Audi A3.

“It (V40) has hit our targets for it. It’s hit our budget for it. It is a case of now looking at the segment and saying, there is still a lot more there we can do. We are mad if we don’t look at how far hard we can push it further,” he said.

“It has achieved everything we wanted it to achieve. Now we are sort of consolidating, going well, actually what more could it do if we concentrated a bit more on opportunities?” The top-seller in the segment so far this year is the A-Class with 2245 sales, with the A3 trailing it on 1634 units, followed by the BMW 1 Series on 937.

Volvo has moved 366 examples of the V40, plus an additional 166 for the V40 Cross Country crossover that launched in August last year.

Mr Braid said despite the relatively low volumes for the V40 Cross Country, the company is “very happy” with how it has been received in the market.

“That segment is an interesting one to watch, because it only participates with a few players. What Cross Country has added to the range for us has very much done its job. It’s providing another opportunity for our dealers. We are very pleased,” he said.

Volvo’s overall sales to the end of May are up 1.7 per cent, with 2112 sales compared with 2077 in the same period last year.

The biggest seller for the car-maker is the XC60 mid-size SUV, which has so far recorded 681 sales, followed by the V40 (366) and the soon-to-be-replaced XC90 large SUV (327).

The car-maker is hoping for a 10-15 per cent boost over last year’s total haul of 5174 units, which points to a 2014 year-end total somewhere between 5500 and 5800 units.

Mr Braid said Volvo, like many brands, was hit hard in the third quarter last year when the federal government announced proposed changes to the fringe benefits tax under former prime minister Kevin Rudd.

He said that an improved result for its recently facelifted XC60 and the spike in interest for the S60 would ensure a strong finish for the brand in 2014, despite diminishing volume of the outgoing XC90.

“We have got XC60 back to where it needs to be,” he said. “After a bit of a slow start in quarter one, it is now back to level it should be operating at.

“If we continue the growth curve of S60, and we must love V40 a bit more, then that’s where the numbers will come from. On that basis we should more than counter any drop off of XC90 in the back end of the year.”