Volvo Rides to Record Sales With Some Splashes of Flash
Sweden’s Volvo has long been considered a bland, boxy export.
Its cars were known for their safety features and unexciting designs, and the brand had a loyal, but limited, following.
That changed after Ford Motor Co. bought Volvo in 1999 for $6.5 billion. Volvo adopted new designs that replaced straight edges with svelte lines and started talking about performance in addition to safety.
Volvo is expected to sell 140,000 vehicles in the U.S. this year, its second straight year of record sales, thanks in part to the popularity of its XC90 sport utility vehicle.
Victor Doolan, 63, a native of South Africa and a former BMW executive, became Volvo of North America’s president in June 2002. He recently sat down to discuss Volvo and its future.
Question: Growth seems to be every carmaker’s focus these days. Can you grow too much?
Answer: You need to grow, but you can’t make the mistake of stretching the brand too far. That’s something many of our competitors are doing. I think Mercedes-Benz has done that and is overextending the brand.
Q: Volvo has a new small sedan -- the S40 with a $24,000 base price -- three station wagons, two larger sedans with a top price of $49,000, and the XC90 sport utility. Is that a sufficient lineup?
A: We have just added a V-8 engine to the XC90, and unofficially, I think it would make a lot of sense to extend it to other models.
Q: Anything else?
A: If we were to bring out small to mid-size SUV, that might make sense, too. But an ultra-luxury Volvo would contradict our brand values. We’re not elitist. Could we go below the S40? Yes. But we probably cannot stretch upward beyond the $50,000 to $55,000 price range. Recognizing where your strength lies is so important, and I do believe the others are stretching themselves too far and losing brand identity because of it.
Q: How about gas and electric-powered hybrid vehicles and other alternatives. Will Volvo compete here?
A: We certainly are evaluating the possibilities of hybrids, and one should not discount the possibilities of modern diesels. I believe diesel will gain in popularity because there’s no compromise in performance anymore, and the costs are reasonable. And of course, hydrogen is a technology we really must explore.
Q: Many other automakers are rolling out hybrids. Do you need one to stay competitive?
A: What we need to do is to eclipse the competition. We’ve got to make sure Volvo customers not only feel good about driving a hybrid but can also make economic sense of buying one. Right now, hybrids are all about feeling good and not about economic sense.
Q: You are leaving on a high note. Volvo sales are setting records, up 22% last year to 134,661 and running 3% ahead of that pace through November. But more important, Volvo is the only profitable member of the Premier group. What does your successor need to do to keep the string going?
A: We have to make sure our pricing is in line with general market conditions and not raise, or lower, prices to try to deal with currency imbalances. We need to keep building the strength of our retail network and to find better ways to serve our customers. We can stand out from the competition with programs like our mobile technician program where dealers -- about 70 of them now have signed up -- send technicians out to customers’ homes to service their cars. And we must always protect the brand’s resale value.
Q: How do you do that?
A: Avoid getting into the incentive mind-set where all you do is discount your cars and go out and flog them to everyone.
Q: But Volvo does offer incentives.
A: Yes, you can’t avoid them in this market, but we haven’t raised our level of spending in three years. Most of all, though, it is important for a brand to stand for something, and Volvo stands for safety and does that very well.
Q: You are getting some competition in safety. Honda has begun promoting its safety developments and said it wants to overtake Volvo as the safety leader in buyers’ minds.
A: Yes, so while we are adding style and performance to the brand, we must make sure we stay in forefront of having the safest cars on the road.
