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Volvo Australia rues SUV stock shortages

Caught short: Volvo Australia suffered stock shortages for the XC60 - its most popular car - during 2011.

Lack of XC60 and XC90 stock curbs Volvo’s Australian sales growth in 2011

Volvo logo14 Dec 2011

VOLVO Cars Australia (VCA) is set to finish the year with its best sales figures since it became a full-line vehicle importer in the 1980s, but will be left to rue what might have been after stock shortages of its two most popular models.

VCA managing director Matt Braid said strong sales of the XC60 and XC90 SUVs in the first half of the year exhausted the brand’s stocks more quickly than expected.

On top of this, the customary shut down of its European factories in August and strong demand for both vehicles overseas meant the brand’s local arm was unable to quickly source enough extra stock.

“There was a peak demand in Europe and elsewhere, and while we were in the mix we couldn’t get the cars we needed,” Mr Braid said.

“So we ran out of stock a lot quicker, and that’s probably cost us about 450 cars.

“So ideally, we would have been very close to 6000 units which would have been give or take 20 per cent year-on-year, which is what we wanted to achieve.” Total Volvo sales sat at 4726 for the year to the end of November – a 9.1 per cent growth over the same time last year.

 center imageLeft: VCA managing director Matt Braid. Below: XC90, S60 and V60.

The first full year of sales of the new S60 sedan and V60 wagon would appear to indicate that the stated VCA goal of 20 per cent growth was achievable. Indeed, the brand was tracking as high as 17.3 per cent up at the end of July.

The stock shortages then impacted the volumes, while a slide in sales of every other member of the brand’s 11-strong local line-up also impacted the result.

Mr Braid said the marque was hoping for a strong December result to push the brand to about 5400 sales for the whole year, compared with 4945 for 2010.

“We were looking pretty good, and that’s just disappointing that we will finish good anyway, but we could have finished a lot better,” he said.

“We were a little bit angry at ourselves if you like, rather than the market.

“We had enough cars in the pipeline to satisfy our predicted sales rate, but in Q2 we actually sold out of cars a lot quicker.”

VFACTS figures from earlier this year show that XC60 sales went no lower than 129 units a month between January and July, peaking at 215 in June. These figures plummeted to 44, 42 and 48 in August, September and October.

The larger XC90 – which has been a brand mainstay since 2003 – consistently sold 90 or greater throughout the year, peaking at 172 in Volvo’s record-breaking June, before falling to 47 units in October.

Mr Braid said VCA had requested more cars before the summer shut down, and that the brand had been given priority slots once production re-commenced.

“We knew we were going to be in a bit of strife with factory shut down because the production volumes do drop down during that stage,” he said.

“When the factory re-opened after summer shut down we were first in the queue to get a ramp up in production in those first few weeks back.”

Those cars began arriving in November, causing sales on both models to rally last month to 146 for the XC60 and 157 for the XC90, but the damage caused by shortages during the third quarter was already done.

All of these extra cars will be here by year’s end, but Mr Braid said it was unlikely that all of these could be retailed or delivered to customers on back-order by December 31.

The silver lining for Volvo is that about half of these cars are already sold to customers on pre-order, and those which are not registered by year’s end will give the brand a solid start to next year.

“This has been a big hiccup for us and we were tracking really well,” he said. “We will show a positive gain but in the back of our minds we’re all sitting here thinking we should have finished a lot better.”

Australia will see no new models arrive next year from the Swedish brand, with the next addition on the radar to be the ground-breaking V60 plug-in diesel hybrid in 2013.

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