Volvo plots return to the US market next year
The Swedish automaker is in the midst of an $11 billion turnaround plan that it hopes will double worldwide sales to 800,000 by 2020.
DETROIT – Volvo has realized that safe is better than sexy.
After several years adrift, as it changed owners and flirted with sexier ads, the Swedish automaker is in the midst of an $11 billion turnaround plan that it hopes will nearly double worldwide sales to 800,000 by 2020. It is building new plants in Sweden and China, introducing new vehicles and developing its own infotainment system that it says will be less distracting.
The company is also hiring a new ad agency and working on a bolder message emphasizing Volvo’s reputation for safety. One idea that could make it into the company’s ads: Volvo’s internal goal of having no deaths or serious injuries in new Volvo cars by 2020.
Volvo doesn’t currently know how many people die each year in its cars, since most countries don’t keep that data. But it says independent studies in Sweden have shown that Volvo passengers are several more times likely to escape injury after a crash.
“Our strength is what we have built over decades,” marketing chief Alain Visser said.
And it didn’t work. Volvo has lost buyers younger than 55 over the last five years, and now has a higher percentage of buyers over 55 – 44% – than some of its key competitors, including Audi, BMW, Acura and Infiniti, according to Edmunds.com.
Volvo’s US sales have tumbled by more than half over the last decade, according to Ward’s AutoInfoBank. The company is frank about why. Volvo had to regroup and develop new cars after Ford Motor Co. – which owned Volvo for just over a decade – sold the brand to Chinese automaker Geely in 2010. In the meantime, its aging models couldn’t compete with other luxury brands like Audi.
The first of Volvo’s all-new vehicles, the XC90 seven-passenger SUV, will go on sale in the U.S. at the end of next year. It’s the first time in 12 years that the XC90 has been fully redesigned. A new S40 small car will follow.
Until those cars arrive, Volvo will have trouble attracting buyers who are skeptical of the brand, says Karl Brauer, a senior analyst with Kelley Blue Book.
“Nobody knows what sorts of products Volvo will produce under the new owners,” he said.
Ford bought 86-year-old Volvo in 1999 to help burnish its own image, but the brand racked up losses as Ford juggled it with a stable of other luxury names like Jaguar. Starved for cash, Ford sold Volvo to Geely for $1.8 billion in 2010.
Volvo CEO Haken Samuelsson said Volvo isn’t using Geely’s cash for its turnaround, but the companies co-operate on projects like the development of a small car. The relationship also opened the Chinese market to Volvo, which sold more than 28,000 cars there – or nearly as many as it sold in the US – in the first half of this year.
Volvo could become the first automakers to sell Chinese-made cars in the US, but only if it thinks US buyers will accept that, Visser said. The company doesn’t currently have plans to build vehicles in North America.
©The Canadian Press