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Volvo tops for customer service as sales dip

Lynchpin: Volvo’s biggest-selling model, the XC60, got off to a slow start sales-wise in 2014, down 21 per cent for the first two months despite an upgraded model launching late last year.

Award puts Volvo at top of industry for customer service as brand looks for growth

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Market Insight logo20 Mar 2014

By TERRY MARTIN

VOLVO is yet to capitalise on current strong sales growth in the prestige and luxury car market in Australia but is at the top of the industry in terms of customer service, having recently won the coveted Car Manufacturer of the Year title in the 2013 Roy Morgan Customer Satisfaction Awards.

This was a major accolade for the Swedish brand as dealership performance becomes an increasingly significant and heavily scrutinised area of a car company’s operations in Australia – and as Volvo looks to improve its sales, which are down 1.7 per cent after the first two months of trading this year, having fallen 3.7 per cent in last year’s record market.

In contrast, rivals such as Audi, BMW and Mercedes-Benz all posted record sales with double-digit growth last year, and are continuing the trend in 2014, while Lexus has also moved into a higher gear this year with new registrations up 16.4 per cent.

Volvo has not experienced a sales boom of this magnitude since 2007, suffering a 7.9 per cent fall in GFC-affected 2008 before climbing back with single-digit annual increases over the subsequent four years, averaging 4.75 per cent growth (for around 5000 units a year) before last year’s setback.

Supply limitations, an aging model line-up and its non-participation in high-volume new segments – an ‘XC40’ compact SUV is yet to reach production, for example – have clipped Volvo’s expansion in Australia, although the brand is now in a renewal phase with the launch of the upgraded S60/V60 and XC60 models late last year and a new-generation XC90 due inside 12 months.

The Australian subsidiary’s high level of customer service is considered vital for not only ensuring repeat business from existing customers but also in growing its buyer base, particularly as key new models are introduced to the market.

Independent awards and survey results from research firms such as Roy Morgan and JD Power and Associates, the latter delivering the influential annual Australian Customer Service Index study, provide an important guide to car companies on their performance at the all-important High Street level, which in turn reflects on the brand’s image, vehicle sales and other areas such as aftermarket parts and servicing.

After finishing second to Mercedes-Benz in the 2012 Roy Morgan awards, Volvo last year recorded five consecutive winning months to finish ahead of the German luxury brand, as well as the two other standout brands in 2013: Lexus and Subaru.

Covering 39 categories across retailing, the finance industry and service providers, the awards are based on the results of Roy Morgan Research’s ‘single source’ surveys of 50,000 ordinary Australians and 22,000 business decision-makers throughout the year.

Volvo finished on top of the monthly surveys in the automotive category from May through to September, which was enough to stave off Mercedes, the best-performing brand in January and February, Subaru’s top billing in March and April, and a fast-finishing Lexus, which won all three surveys across the final quarter of the year.

As well as winning the Car Manufacturer of the Year award, Volvo’s overall satisfaction score of 95 per cent was higher than any other company across all other categories.

Volvo Car Australia managing director Matt Braid said the award was “testament to our strong brand, excellent product and dedicated dealer network creating a positive ownership experience”.

“We have a number of internal KPIs (key performance indicators) we set around customer satisfaction, so to see one of the measures we take seriously be independently recognised is tremendously satisfying,” he said.

“All credit to the Volvo dealer network.” Of the Volvo owners surveyed by Roy Morgan during 2013, 69 per cent said they drove a passenger vehicle, while 31 per cent drove an SUV, “with the gap closing between the two categories all the time due to SUV growth”.

“Among those who purchased a new vehicle, satisfaction levels were at the high 90 per cent levels, while those who purchased their car used still demonstrated satisfaction levels in the low 90s,” the company said in a statement announcing its award.

“Volvo SUV owners were marginally more satisfied than their passenger counterparts, generally one or two per cent higher each month.” Volvo has 33 dealers in its retail network, and earlier this month announced Annlyn Motors was its 2013 Dealer of the Year – a title the Penrith dealer in New South Wales has now claimed five times.

After taking last year’s title, Mercedes-Benz declared its ambition to go back-to-back in the 2013 Morgan awards, despite having to manage a large influx of first-time buyers attracted to its brand by new entry-level models such as the A-Class.

Volvo has been included in JD Power’s Australian CSI study since it was introduced in 2010, but the brand’s results have not been shown due to an insufficient sample size. Ditto for Mercedes-Benz, Lexus and other European marques.

The Roy Morgan awards program has been running for the past three years.

Roy Morgan Research chief executive Michele Levine said that by aggregating 12 months’ worth of responses to its ‘Consumer Single Source’ and ‘Business Single Source’ surveys, the research firm was able to “identify and celebrate those businesses, large and small, that have outperformed their competitors in customer satisfaction”.

She said the commitment by Volvo and other category winners to satisfying their customers was “setting industry standards and being recognised not only by consumers but by businesses around Australia”.

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