Volvo Embraces Online Sales, Swedish Roots—and Personal Technicians
Volvo has always cut against the grain of the global automotive industry. Now the company plans to do so again as it shifts to a focus on digital marketing and internet sales, including a new plan to sell Volvos directly online.
It's been a bumpy road for sure for Volvo since Ford owned the brand for a while and then sold at the same time as Jaguar Land Rover several years ago. Volvo barely survived the recession, had to pull back drastically from a US market that once was promising, then found new ownership by Zhejiang Geely Holding of China in 2010.
Geely has infused new capital in the brand, bringing in new leadership, supply capital to revamp its vehicles and giving Volvo a growth platform in China. The brand also announced at the recent L.A. Auto Show a complete overhaul of its product line starting next year.
But none of that is enough to solve the thorny problem for Volvo of still not having enough marketing resources overall to compete with the big guys of the premium automotive market such as BMW, Mercedes-Benz and even Tesla. Plus Volvo's dealer presence, sales and brand have deteriorated badly in the once-key U.S. market even during the overall American-market recovery of the last few years.
So Volvo's new plan is to shun some of the traditional auto-marketing venues including most TV advertising and most global auto shows and focus, instead, on setting up an online-sales presence, expanding in social media and making what Volvo sales and marketing chief Alain Visser told the Wall Street Journal would be "massive" investments in overhauling the Volvo website.
"This is a risk," he told WSJ. "But to continue like before is not the right option."
Volvo will boost marketing spending, Visser said, but it will focus mostly on the digital realm, gradually introducing web sales and spending more on digital advertising. "The plan is to have all our car lines in all our markets offered digitally," Visser told Reuters.
Naturally, this kind of talk makes dealers restive. Tesla didn't have a dealer body when it began its direct-sales push in the United States, but the American dealer body has been fighting back anyway. Volvo has about 2,000 global dealers, but about half are in Europe, and its number has been dwindling in the US, where the resistance of traditional retailers to any online sales of automobiles has been strongest and has been facilitated by the dealer body's vast political power, especially at the state level where dealership-franchise laws are written.
Visser asserted that while e-commerce makes dealers "nervous," Volvo doesn't plan to cut its existing dealers out. "We don't see a car distribution network without dealers in the forseeable future," Visser told Reuters. Online sales, for instance, "will still pass through the dealer network for delivery."
Volvo also said that it's going to forego most global auto shows from now on, attending just one major show in each major regional market starting next year: the North American International Auto Show in Detroit next month, Geneva in March and Beijing in April. Instead, Volvo will host more of its own events, such as the launch of its new XC90 sport-utility vehicle last summer at an art museum.
Dealers won't be happy about Volvo missing out on the dozens of auto shows that lubricate sales in local markets. But they will be happy to hear that Volvo isn't planning to ask any of them to build city-center showpiece retail outlets like the major luxury brands have been doing in New York, London and other metropolises. "We don't believe in building these big palaces," Visser told Reuters.
Volvo—while under Chinese ownership—also will ask dealers to invest in a "globally uniform lay-out and look and feel," a press release on Monday stated.
Those plans will harken back to the brand's Scandinavian heritage, including "offering customers a drink in Sweden-produced glasses" and serving "Swedish cuisine" in waiting areas.
What's more, customers will be greeted with "sound and smell elements (to) portray a Scandinavian spirit" while "all dealer staff will go through a training program to be familiarized with these new customer service processes and standards. European dealership staff will be dressed by Swedish fashion designer Oscar Jacobsson."
And if that's not enough, the Volvo Personal Service commitment will see the introduction of a Personal Service Technician for each and every Volvo customer:
At the delivery of his or her new car, the customer will be introduced to the Personal Service Technician who will take care of the customer and car throughout the ownership. This programme obviously requires an extensive training and development programme, which is already underway. A number of countries have already adopted the Personal Service Technician concept as a pilot programme and customer satisfaction in these markets has increased significantly. By 2018 all Volvo dealerships around the globe will be offering this service as standard.
