Volvo’s ‘cool’ image helps sales growth

 

“When things slow down a little bit, and people aren’t making as much money as they were, there are always some people who are beating the trend. And I think the Volvo brand isn’t particularly flash. I think it’s sort of slightly understated and we’re fine with that.

 

“And I think, if you’re going to buy a new car, it’s almost more acceptable to buy a new Volvo than it is to buy other premium brands. And we saw this until 2008-2009 in the UK, when the financial crisis hit and people stopped buying new German premium product and British premium product.

 

“They still bought our cars. In fact, we had one of our best years in a long time. 

 

“And I think that's partly because it was sort of the acceptable way to spend money, without being not too flashy – functional, but actually a still very high-quality product. So I think our brand helped us there. And I think in this market as well.”

 

Having a point of difference of being a Scandinavian brand has also helped Volvo in Australia, according to Mr Connor.

 

“I’ve worked for the company for 23, 24 years, and I say to people that our values are exactly the same as when I joined and probably the same as when the company was formed in 1927.

 

“The world values have moved towards Volvo, not the other way around. So I think the things we’ve always stood for, like environmental concern, functionality, safety, family ... and of course we’re a Scandinavian brand, and all of a sudden Scandinavian fashion, Scandinavian furniture, Scandinavian ideas ... all of a sudden, there’s a part of the zeitgeist, and we’ve never been there before.

 

“So yes, I think suddenly Volvo as a brand is cool, Scandinavia is cool, and I think we happen to have, as you currently said, killer products at the same time as well.”

 

Mr Connor said he expected Volvo to end 2018 with 6500 to 7000 sales, exceeding 6000 annual sales in Australia for the first time in the modern era.

 

“I think it’s good, not just for us, but for the dealers,” he said. “The dealers have been sort of battling away for quite some time. And it’s a tough market.

 

“And I think it’s great for them, that they’ve been able to deliver that growth. Their throughputs obviously have gone up. We have the same number of dealers that we had a year ago, so we haven’t increased the size of the network.”

 

Mr Connor said the company was still aiming for 10,000 annual sales in Australia by 2020, but he added that he was “not obsessed by volume” and would ensure any growth was sustainable.

 

“I always say ‘any fool can sell a car’. And it’s only partly true actually these days. But, you’ve got to make money doing it. And I’m much more interested in us and our dealers selling cars positively than I am about hitting some vanity number that makes us all feel good, but doesn’t make us any money.

 

“I think we need to accept that the brand needs to grow in this market because actually where we were isn’t sustainable for them or for us. And it’s not even great for consumers either because they want an infrastructure that supports the cars that they bought. 

 

“So I think 10-12,000 units a year over the next few years. We have a very viable business model in Australia. We have enough coverage to support existing and future customers. And dealers can make a sensible return with that sort of throughput.

 

“If we do 9500 (sales), we haven’t failed as far as I’m concerned. That’s still a great result if everyone’s been able to make some money and keep customers happy at the same time.”

 

Mr Connor said he has not been surprised by the sales success of the XC40 small SUV that was launched in May this year and has quickly become the brand’s second best-selling model with 1200 sales so far this year, trailing the XC60 medium SUV on 2367.

 

“One (reason) is because that segment is booming,” he said. “ The stats tell the story. It’s the fastest growing segment in Australia. It’s the fastest growing segment globally. I knew we had a great car. I saw it first probably four years ago, and I knew it was a standout product.

 

“So, we’re not surprised. The reality is that we’re sold out of that car. Everywhere, it’s not just here.

 

“It’s been a huge success in every market we’ve launched it in. The challenge here is really to get enough supply. But, I’m happy to live with that because that means that the car is more popular than we have demand. It’s good for customers. It’s good for resale values. It’s good for everybody.”

 

Mr Connor said if a customer ordered an XC40 now, depending on the model grade, it would be delivered in March or April next year.

 

The XC40 is the sixth best-selling model in the premium small-SUV segment behind the Mercedes-Benz GLA (3387), BMW X1 (2634), Audi Q3 (2062) and Audi Q2 (1569), but it leads the BMW X2 (988), Mini Countryman (866) and Jaguar E-Pace (848).

 

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