Volvo sticks with 800,000 target

VOLVO Car Group is persevering with its ambitious target of 800,000 sales globally by 2020, with a new model onslaught and continued focus on both United States and Chinese markets facilitating the growth.

The target to double its sales to 800,000 units annually was first mooted by former Volvo Cars CEO Stefan Jacoby at the Los Angeles motor show in 2010, shortly after Chinese company Zhejiang Geely Holding Group bought the Swedish brand from Ford.

In 2009, Volvo sold 334,808 vehicles worldwide, a number which has since increased significantly, reaching a record total of 465,866 units last year.

The strong result represented an 8.9 per cent lift over 2013’s sales, while December last year was the 18th consecutive month of sales increases, which the company put down to growth in China and Western Europe.

Sales in the latter region, which includes its home market, Sweden, climbed by 11.4 per cent last year compared with 2013, following increased demand for the XC60 SUV and V40 hatch.

In China, the locally built XC60 and long-wheelbase S60L sedan were the top sellers, helping lift sales by 32.8 per cent to 81,221 units. Volvo operates three manufacturing plants in China, which is now the car-maker’s biggest market.

Speaking with GoAuto at the first media drive of the XC90 SUV in Spain this week, Volvo Cars Group product manager Lars Lagstrom said the goal was still to reach 800,000 sales by 2020, and highlighted the Chinese and American markets as key to achieving this target.

“Of course China is very important to us,” he said. “Our most important thing today is to get America going.

“In the Ford time, America was declining and we had the bad days in 2007 and 2008, which we still suffer from – they took a lot of decisions that we don’t have all the models in the US.”

The American market still misses out on the V40 hatch and the high-riding V40 Cross Country, but it does now offer the jacked-up V60 Cross Country wagon.

Sales in the US actually dropped by 7.9 per cent last year to 56,371, but the introduction of the new XC90, a new leadership team and a new marketing strategy should give the brand a boost in the region in 2015.

Volvo will refresh its entire model line-up, and introduce new models in the coming years, with Mr Lagstrom pointing out that the second-generation XC90 that goes on sale in Europe in the next couple of months will be the oldest Volvo model in showrooms within four years.

Replacements for the XC60, S60/V60 mid-sizers, a new V40 that will share its underpinnings with Geely-badged models, a V40-based XC40 crossover and an all-new S90/V90 flagship to rival the BMW 5 Series are all planned in the next four years.

Mr Lagstrom said increasing sales beyond the 800,000 target after 2020 was a possibility, but added that due to Volvo’s relatively small size in the global market, it would not expand its model line-up into potentially unsustainable segments.

“Of course we would like to expand more. If we get the revenue, we have the sales, then we can expand our portfolios, but we need to do that carefully because we are not a huge company and we have limitations in everything we do,” he said.

“We could do all kinds of things but we need to do it where there are business opportunities and we fulfill the promises to the customer.”

Volvo Car Australia marketing and a communications director Oliver Peagam said the car-maker’s local arm sets its own sales targets, but added that it will play a part in helping achieve the 800,000 global sales target.

“We will contribute to this relative to our size and the opportunities available here in Australia,” he said.

Last year Volvo Car Australia sold 4693 vehicles, representing a 9.3 per cent dip compared with the 5174 sales in 2013.

When asked why Volvo has not been able to stretch far beyond 5000 annual sales in Australia, Mr Peagam said the number of competing brands and its relatively small model line-up have had an impact.

“There’s no doubt Australia is a competitive market and there are one or two segments that we’re not yet playing in, so both of these play a factor.”

Mr Peagam said the company did not discuss internal sales targets, but suggested the brand would experience “a healthy increase” over its 2014 result, aided by the arrival of new products.

“A robust product strategy is just one of the keys to achieving growth, and the all-new XC90 is just the start of a Volvo product onslaught over the next few years.”

The top-selling Volvo model globally last year was the XC60 mid-size SUV with 136,993 units shifted – up 20.2 per cent on the previous year – while in Australia, the six-year-old crossover was also number one for the brand, with 1519 sold.