Volvo ESC overhaul could raise prices

VOLVO will finally – and belatedly, according to some pundits – fit standard electronic stability control (ESC) across its entire range in Australia by the end of September.

Although more expensive Volvos already have ESC (and all have a mechanical traction control function), it will not be standard on entry-level C30, S40, V50 and S60 models until 2009 model year production commences in June and reaches Australian showrooms in August and September.

However, Volvo Cars Australia general manager Alan Desselss told GoAuto that the company may have to raise prices as a result.

“At this stage we’re trying to hold the price, but we’re going to struggle a bit,” he said.

“Exchange rate is the main thing. If the currency remains strong, there’s a good chance we’ll be able to absorb it.” The Swedish car-maker, which prides itself as the automotive leader in safety, has been forced to make the move because the Australian New Car Assessment Program (ANCAP) announced last September that it would not award a five-star crash rating without ESC from 2008.

“I think it would have been a natural progression, but would we have done it right now? Probably not,” said Mr Desselss.

Left: XC60 and V70.

He said that ESC is a very important safety feature, especially for rear-wheel drive cars, but takes issue with the governments pushing for it to be mandated without any assistance for consumers.

“If all these cars are going to be that much safer, there will be less road carnage and therefore we should see a reduction in insurance and in our road taxes,” he said.

“I think it is unfair that the motor manufacturers are the ones who are going to have to absorb the price or pass it onto the consumer.

“Everyone is saying that it is going to make so much difference to the amount of road carnage, then let the State premiers, who are all pushing for this road safety, to come forward and compensate somehow. Otherwise, the end user ends up paying.” Mr Desselss said that the FCAI is taking that argument to the government, but is not necessarily getting a good hearing.

While Mr Desselss said that Volvo was proud of its safety record, he indicated a shift in image for the Swedish brand, with the emphasis on “good styling and good performance”.

“I think that everybody expects most motor vehicles to be safe. I think what we’ve got to do is to continue to pioneer safety features and that’s what we do. That’s what Volvo is so good at. The Swedes are very passionate about safety in motoring and that will continue.

“Our long-term strategy would be to make sure that we to concentrate where our core values and our strengths are, and that means the V range and the XC range. The heartland for Volvo is in the wagon and the XC range.

“We do not want to take the Germans on in their heartland, which is sedans and coupes, but we want to offer a good European alternative for people that are tired of the Germans.

“Conquesting away from other manufacturers is going to be hard at this stage, especially with the push from Audi, which is on a mission – buying market share to be up with BMW – but they’ve got a long way to go if they want to get there and they’ll have to spend a lot of money.

“We just can’t do that, so I think we’ll be very happy to maintain our current (share) and then look for growth out of new models.” He is happy with Volvo’s current market share and sales of around 6000 a year (having grown from less than 3000 in 2005), but the expected C10 light car will take Volvo into a big new market segment.

Asked about the C10, which will use the new Mazda2/Ford Fiesta platform, he said “if it gets launched, we’ll definitely get it” and it will add significant volume for Volvo.

“I think there’s an opportunity there. Clearly we’re seeing a shift away from large cars to smaller cars, but that is an opportunity that most manufacturers will be exploring.” Having just launched the all-new third-generation V70 wagon, Volvo Australia is now looking forward to getting the coupe-styled XC60 SUV (expected by the end of this year), the new S60 sedan (2009) and an XC90 facelift.

Read more:

First drive: Volvo advances uptown with new V70

Volvo consolidates

Volvo ESC call