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Volvo brand to ‘sharpen’ under Jacoby

Up market: Volvo's new president and chief executive Stefan Jacoby has indicated the company's new owners, Geely, want him to develop high-level cars to take on Mercedes-Benz and BMW.

Alliances on the table as new Volvo boss sets out to better define Swedish brand

Volvo logo19 Aug 2010


VOLVO Car Corporation’s new president and chief executive, Stefan Jacoby, has set about “sharpening” the Swedish brand’s position and will consider partnerships with other car companies to gain economies of scale.

In his first press conference as CEO, the former Volkswagen executive said his main focus was on future models and that he would develop a strategy to ensure the Swedish brand was better represented in global markets, including China.

Mr Jacoby was appointed to lead Volvo into a new era after China’s Zhejiang Geely Holding Group Co earlier this month finalised a $US1.8 billion ($A2b) purchase deal with Ford Motor Co.

Since then, Geely (and now Volvo) chairman Li Shufu has made it clear that he wants Volvo to move further upmarket into the full-size limousine sphere, producing “high-level cars that compete with the Mercedes S-class and BMW 7 Series”.

This will be important for Volvo’s aspirations in the booming Chinese market, although Mr Jacoby insisted overnight that the company would not simply copy others and was working on finding its own “Swedish-based definition” of what the brand and its products should deliver.

“We need to have an intensive discussion within Volvo to further sharpen the brand position,” he said.

“This is one of the earliest priorities which I have set for myself and for the new management team – to discuss and to define what Volvo stands for.

 center imageLeft: Volvo S80. Below: Geely and Volvo chairman Li Shufu.

“It is also important because we want to enter into new markets, so we have to take the Chinese market and their customers into consideration as well and look for our opportunities in this market.

“I also believe that by just looking into the so-called premium segment, and copying our core competitors, cannot be the solution. We cannot say, well, just do what BMW is doing ... we need to find our Swedish-based definition of what Volvo should deliver in the future to their customers.

“And it needs to be a unique positioning – we cannot be just a copy of other brands, we need to find a Volvo definition of what premium stands for.”

While not being specific on future models, Mr Jacoby said “our main focus in the next months, and in the next years, will be product, product, product” and that although existing customers had a strong emotional attachment to the brand, and valued aspects such as safety and reliability, the current position “is maybe not sharp enough to attract customers in the future as well”.

“Only through our products can we actually make our future happen, and make it actually bright,” he said. “We need to have to a solid product strategy which actually delivers our vehicles on a global scale, including China of course.”

Key to this will be finding new economies of scale, which Mr Jacoby said could take the form of partnerships with other car companies.

“Scale of economies is one of the key factors in having a competitive cost base,” he said. “But what we need to see, and what we need to understand as well, is that size and volume and brand portfolios also brings, for such a corporation, complexity – and reduces the speed.

“And I think this is the opportunity which we have as a little ‘David’ in this industry, that we can have a management style which is lean and which is quick, and which actually sets the pace in the industry.

“So we have advantages, and we have to look for smart, intelligent solutions to overcome the obvious disadvantages with not having this kind of scale of economies.

“There are opportunities to co-operate with suppliers, with maybe other competitors as well, but also, of course, to find synergies with our sister company Geely.

“Our Chinese investment also offers opportunities to source out of the Chinese market as well, which also will bring us a better cost basis.”

Mr Jacoby refused to be drawn on sales forecasts for Volvo under the new regime, saying it was too early, although Geely’s plan includes almost doubling Volvo’s annual global production, including building a new plant in China.

He also dismissed speculation that surfaced during the company sale process that Volvo could merge completely with Geely.

“I think Li Shufu clearly understands the value of the Volvo brand,” he said.

Volvo has not posted a profit since 2005. It sold around 334,000 cars last year, down from a peak of 458,000 in 2007.

In Australia, Volvo Car sales are up 6.8 per cent year to date, with just over 2700 sold to the end of July. Last year it managed almost 4700 sales to be 4.5 per cent ahead of 2008.

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