Volvo introduces capped-price servicing

VOLVO Car Australia (VCA) has responded to media feedback by reducing the servicing costs of its models with a capped-price program now available range-wide.

Speaking to journalists this week at the S60 national media launch in South Australia, VCA managing director Nick Connor said the media, in particular, was a strong force behind the decision to review the servicing costs.

“A number of you on many occasions have told us and our potential customers that our servicing costs are relatively too high,” he said.

“I can take issue about perception versus reality, but we haven’t done that. We’ve actually looked at it and responded.”

The comprehensive capped-price servicing program covers the first three visits, which for all Volvo models are at intervals of every year or 15,000km, whichever comes first.

The newly launched mid-size S60 sedan and V60 wagon cost $1595 over this period, as does the popular XC40 small SUV.

Petrol versions of the XC60 mid-size and XC90 large SUVs are $200 dearer, with their diesel counterparts $100 further upstream alongside the V90 Cross Country large wagon.

Mr Connor described the program as “a comprehensive offer” at “an attractive price point” that “removes one of the very few objectives that have been raised about our products in this marketplace”.

“Our dealers have been happy to support that,” he added. “They recognise that we have to be competitive. We know a lot of other brands have very heavily subsidised servicing plans.

“I think what we have now is very competitively priced cars, we have very competitively priced and fixed-priced servicing, so that people know exactly what they’re getting into when they buy a Volvo – and that reinforces the message of safety and reliability that we’ve been trying to get out there.”

The has come at an internal cost, though, with Mr Connor revealing that VCA and its dealer network now stand to profit less from a servicing perspective.

“We culled our parts margin, honestly,” he said. “We haven’t culled the content because the service requirements are the service requirements. We have very comprehensive service requirements. I think we fit the world’s most expensive pollen filters in our cars – genuinely.

“Dealers have got a bit of skin in the game … so it’s a combined effort. And frankly, we sat with our dealer council and said (the media is) telling us we’re too expensive, and we can sit around all day saying, ‘Yes, but our content is great, our parts are expensive, great quality and last forever’, but the reality is if that’s the perception, that’s the reality, so we had to do something about it.

“(The media has) told us we have a problem. I think we’ve responded as well as we can. We’re not the cheapest, we’re not trying to be the cheapest. We’ve got a very comprehensive service program for our cars.

“But I think it just removes that objection that we’re being told about … for those customers that have that concern.

“Some people say, ‘I’m fine to negotiate each service as they come and not take it’, but at least there’s that option.”

While VCA has revisited its servicing costs, it appears that its three-year/unlimited-kilometre warranty will carry on indefinitely, although Mr Connor did say it “is under constant surveillance”.

“None of our premium competitors have gone to a permanent five-year warranty, so the question is: are we a leader or a follower? I don’t know, but we’ll keep an eye on it and see what happens to the market,” he said.

“I don’t think it will actually sell us a tonne more cars (going to a five-year warranty), but if that’s what the market demands, then we can react.

“I’m not ruling it out, but not at the moment.”

Mr Connor conceded that VCA has “crunched the numbers and there were arguments for it and against”, but he has nonetheless remained unconvinced.

“The cost of doing it is actually not all that great,” he said. “It’s not really a money thing, it’s more about do we really want to be leading rather than following in that area.”