Leases, marketing vital to Volvo survival plan
#1
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Leases, marketing vital to Volvo survival plan
http://www.autonews.com/article/2013...#axzz2kT7aQ66H
Can Volvo do it?
Can Volvo do it?
DETROIT -- Until new vehicles start arriving late next year, Volvo's plan for survival in the United States involves an aggressive return to leasing.
Volvo's new executive team -- including CEO Hakan Samuelsson and Tony Nicolosi, president and CEO of North America -- met last week with Volvo dealers and outlined a five-point plan to end the company's near-decade-long sales skid.
In an interview, Samuelsson made it clear that Nicolosi, who was appointed last month with an "interim" title, has won the job as head of Volvo Cars North America.
"He has the right qualities, and he's going to take this job up now 100 percent," Samuelsson said. "There is no search going on for a replacement of him. He is now going to do this job, and he has the full support and confidence from us."
Nicolosi's creation of a captive financing company, Volvo Car Financial Services, last year was a key credential. With luxury brands moving roughly half their vehicles by lease, Volvo badly trailed competitors.
"We have to be better in lease," Samuelsson said. "I mean the market, if you like it or not, half of the market is lease."
Volvo plans to increase global volume from its current 450,000 units per year to around 800,000 by 2020, with U.S. sales returning to its prerecession high of around 130,000 units. China is expected to be Volvo's largest market, with yearly volume of 200,000 units.
The plan, shared with U.S. dealers last week, includes new powertrains, new vehicles, more leasing and fresh marketing by a new global ad agency. Much of the initial effort will be geared toward the successful launch of a redesigned XC90 crossover late next year, the centerpiece of an $11 billion, five-year investment in new products and factories.
If the plan doesn't deliver, Chinese-owned Volvo will face tough decisions. Many of its 308 U.S. dealers are unhappy and their franchises unprofitable. Through October, total industry sales are up 8 percent for the year, while Volvo's U.S. sales are down 7 percent. Volvo is on track to sell about 60,000 units in the United States this year, down more than 50 percent from the company's 2004 high of 139,000. Sales have been declining every year since then.
In a discussion with journalists in Detroit last week, Volvo executives wouldn't commit to a specific U.S. sales goal beyond 100,000 in the next three years.
Nearly all aspects of the automaker's business will be getting an overhaul, including:
• Advertising and social media: Volvo is close to naming a new ad agency to steer the company's global account. The shop will be charged with developing a global campaign that conveys to car buyers Volvo's traditional strength -- safety -- along with some new twists. Two agencies seek the Volvo account. The incumbent, Arnold Worldwide, is not in the running, said Alain Visser, senior vice president of sales, marketing and customer service. A decision could come this month.
• Leasing: Volvo will continue its aggressive return to leasing, said Nicolosi. Leasing volume declined during the recession to 10 percent of Volvo's volume, he said. This year, it will be in the 35 percent range, and he's shooting to top 40 percent next year. The company is paying a price for steering away from leases.
• "It's one reason why dealers are unhappy," Nicolosi said. "Leasing is the cornerstone of building a pipeline of return business."
• Powertrains: Lex Kerssemakers, Volvo's senior vice president of product strategy and vehicle line management, said the company has begun replacing its entire powertrain lineup with three- and four-cylinder gasoline engines with and without turbochargers; three- and four-cylinder diesel engines based on the same architecture as gasoline engines; and hybrids that use an electrified rear axle.
• Products: The V60 sport wagon returns to Volvo's U.S. lineup in January. The XC90 will be crucial to Volvo's future. It must be a home run because the scalable architecture is being designed to underpin Volvo's next stab at smaller, mid-sized C-segment cars.
• Those vehicles, likely to be marketed under the 40 series badge, will be developed with its parent, Zhejiang Geely Holding Group Co.
• Future technologies: Volvo engineers are working on autonomous cars. Other technologies Volvo plans to offer include plug-in hybrids and advanced connectivity.
• Manufacturing: There are no plans for vehicle assembly in the United States. Vehicles sold in the United States are imported from Europe.
• The company recently opened an engine plant in China, and its second assembly plant in that country began producing vehicles this month. Visser said some Chinese-made cars eventually could be exported to the United States.
Read more: http://www.autonews.com/article/2013...#ixzz2kT8NrODO
Follow us: @Automotive_News on Twitter | AutoNews on Facebook
Volvo's new executive team -- including CEO Hakan Samuelsson and Tony Nicolosi, president and CEO of North America -- met last week with Volvo dealers and outlined a five-point plan to end the company's near-decade-long sales skid.
In an interview, Samuelsson made it clear that Nicolosi, who was appointed last month with an "interim" title, has won the job as head of Volvo Cars North America.
"He has the right qualities, and he's going to take this job up now 100 percent," Samuelsson said. "There is no search going on for a replacement of him. He is now going to do this job, and he has the full support and confidence from us."
Nicolosi's creation of a captive financing company, Volvo Car Financial Services, last year was a key credential. With luxury brands moving roughly half their vehicles by lease, Volvo badly trailed competitors.
"We have to be better in lease," Samuelsson said. "I mean the market, if you like it or not, half of the market is lease."
Volvo plans to increase global volume from its current 450,000 units per year to around 800,000 by 2020, with U.S. sales returning to its prerecession high of around 130,000 units. China is expected to be Volvo's largest market, with yearly volume of 200,000 units.
The plan, shared with U.S. dealers last week, includes new powertrains, new vehicles, more leasing and fresh marketing by a new global ad agency. Much of the initial effort will be geared toward the successful launch of a redesigned XC90 crossover late next year, the centerpiece of an $11 billion, five-year investment in new products and factories.
If the plan doesn't deliver, Chinese-owned Volvo will face tough decisions. Many of its 308 U.S. dealers are unhappy and their franchises unprofitable. Through October, total industry sales are up 8 percent for the year, while Volvo's U.S. sales are down 7 percent. Volvo is on track to sell about 60,000 units in the United States this year, down more than 50 percent from the company's 2004 high of 139,000. Sales have been declining every year since then.
In a discussion with journalists in Detroit last week, Volvo executives wouldn't commit to a specific U.S. sales goal beyond 100,000 in the next three years.
Nearly all aspects of the automaker's business will be getting an overhaul, including:
• Advertising and social media: Volvo is close to naming a new ad agency to steer the company's global account. The shop will be charged with developing a global campaign that conveys to car buyers Volvo's traditional strength -- safety -- along with some new twists. Two agencies seek the Volvo account. The incumbent, Arnold Worldwide, is not in the running, said Alain Visser, senior vice president of sales, marketing and customer service. A decision could come this month.
• Leasing: Volvo will continue its aggressive return to leasing, said Nicolosi. Leasing volume declined during the recession to 10 percent of Volvo's volume, he said. This year, it will be in the 35 percent range, and he's shooting to top 40 percent next year. The company is paying a price for steering away from leases.
• "It's one reason why dealers are unhappy," Nicolosi said. "Leasing is the cornerstone of building a pipeline of return business."
• Powertrains: Lex Kerssemakers, Volvo's senior vice president of product strategy and vehicle line management, said the company has begun replacing its entire powertrain lineup with three- and four-cylinder gasoline engines with and without turbochargers; three- and four-cylinder diesel engines based on the same architecture as gasoline engines; and hybrids that use an electrified rear axle.
• Products: The V60 sport wagon returns to Volvo's U.S. lineup in January. The XC90 will be crucial to Volvo's future. It must be a home run because the scalable architecture is being designed to underpin Volvo's next stab at smaller, mid-sized C-segment cars.
• Those vehicles, likely to be marketed under the 40 series badge, will be developed with its parent, Zhejiang Geely Holding Group Co.
• Future technologies: Volvo engineers are working on autonomous cars. Other technologies Volvo plans to offer include plug-in hybrids and advanced connectivity.
• Manufacturing: There are no plans for vehicle assembly in the United States. Vehicles sold in the United States are imported from Europe.
• The company recently opened an engine plant in China, and its second assembly plant in that country began producing vehicles this month. Visser said some Chinese-made cars eventually could be exported to the United States.
Read more: http://www.autonews.com/article/2013...#ixzz2kT8NrODO
Follow us: @Automotive_News on Twitter | AutoNews on Facebook
#2
Lexus Test Driver
Volvo missed the boat...nothing really stands out about them and i hate their interiors.
They should of been a pioneer in crossovers and small CUVs...not sure what they can do.
They need to re-focus into being a sub-luxury brand with Buick, Acura, etc.
They should of been a pioneer in crossovers and small CUVs...not sure what they can do.
They need to re-focus into being a sub-luxury brand with Buick, Acura, etc.
#6
Lexus Test Driver
Interiors need help and better tech.
Volvo needs to market itself sort of like a Luxury Subaru.
Their brand name still carries equity.
If nothing else, they got billions of Chinese they can sell to.
#7
Volvo being a Premium brand competes against Buick and Acura. As Buick is a hot seller in China it makes perfect sense to target those models. Like you say they have equity in the name and do a wagon well. They should be fine, but they need to work on what they offer stateside
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#8
LeftLaneNews
China-based Volvo parent company Geely has announced the Swedish automaker will move up a notch on the market in order to go head-to-head against well-known players like Mercedes-Benz, BMW and Audi.
"We will make Volvo cars more luxurious and high-end. Volvo will strive to become 1 of the dominant players in the luxury car sector," affirmed company chairman Li Shufu during a press conference held in China.
Shufu did not reveal details about Volvo's future product plans but he has previously indicated the automaker will develop a large, range-topping luxury sedan aimed at the BMW 7-Series and the Mercedes-Benz S-Class. Tentatively called S100, the flagship will ride on a lengthened version of the modular Scalable Platform Architecture (SPA) that will underpin the next S80 and the upcoming 2nd-gen XC90.
The S100 is expected to enter production in Volvo's Chengdu, China, plant in the next couple of years. Shufu has not commented on whether the sedan will be exported to other markets such as Europe and the United States.
In addition to boosting profits, moving Volvo up a notch on the market will make it possible for parent company Geely to sell a full lineup of aggressively-priced mainstream models built with technology gleaned from the Swedish automaker's R&D department.
"Geely and Volvo are like brothers, not father and son," explained Shufu, adding that he would like the 2 companies to operate like Volkswagen and Audi.
Volvo is hoping the popular V40 hatchback will help it sell 80,000 cars in China this year, an ambitious goal that would make China its largest global market. Last year, the automaker sold approximately 61,146 cars in China (up 45.6% from 2012) and 61,233 cars in the United States (down 10.1% from a year earlier).
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