Volvo Sees Few Benefits as Last Swede Standing

Seeking to expand its appeal beyond its serious side, the auto maker sees Japanese and German rivals as the real competition.

Steve Finlay, Senior Editor

August 13, 2012

3 Min Read
Volvo not just playing it safe says Maloney
Volvo not just playing it safe, says Maloney.

PARK CITY, UTBeing the last Swede standing may bestow a few benefits on Volvo, but its real competitors are based elsewhere in the auto world.

So says John Maloney, president of Volvo Cars North America, describing life after Saab, which died as a conventional auto maker last year in Trollhattan after a long illness. Saab may resurrect itself as an electric-car company.

“Saab volume was very small at the end, so we weren’t competing much against them,” he tells WardsAuto here. “Our primary competition is the Japanese and Germans. By brand, Volvo customers cross-shop BMW the most.”

An advantage Volvo can press as the sole surviving Swedish auto maker is that it is singularly poised for a matchup of “Scandinavian luxury vs. German luxury,” Maloney says.

“The advantage is not necessarily as the last Swedish car company standing but as a company that can compete on our own terms,” he says. “Our cars are designed around people. We understand people more than anyone else, and a lot of that is evidenced by the design of our cockpits. And we’ll be taking a giant leap in that area.”

That leap of faith will include advanced telematics and better human-machine interaction. “Most HMIs have room for improvement,” Maloney says.

Volvo, dating to 1927, is in the second year of ownership by China’s Zhejiang Geely Holding Group after Ford divested itself of the brand.

Volvo has grand global plans, hoping to sell 800,000 units annually by 2020, compared with 450,000 last year.

But U.S. sales have been off this year, with 34,617 deliveries through June, a 4.6% drop compared with like-2011.

Maloney cites three reasons, “not excuses,” for that. The first is that Volvo stopped offering the V50 station wagon and S40 compact, paring its U.S. lineup to seven models.

Second, Volvo’s corporate and rental fleet sales have fallen this year, largely because of the smaller lineup. Relying too heavily on fleet sales can hurt an auto maker. “But you need to do a healthy fleet business,” Maloney says.        

Third, Volvo has been relatively conservative in doling out customer incentives. “Some auto brands offer incentives of up to $4,500,” he says. “We don’t want to be the top guy there, but we want to be competitive.”

Maloney predicts stronger U.S. sales during the rest of 2012 for Volvo, a brand that seeks to expand its appeal beyond its serious side.

“Clearly our foundation is safety,” he says. “If you ask the man on the street what Volvo represents, 90% would say safety. Some might say boxy design but that’s more a lingering perception, if you look at the style of what we make now.”

Maloney regularly opens staff meetings by reading letters from accident victims who credit Volvo’s safety features for saving their lives.

“I’m not a teary guy but some of those letters are really touching,” he says. “So, we’re going to be the safety leader; we’re not going to give that up and we’re extremely proud of it. But we want to bring in other things too, like driving dynamics.”

Volvo touts that as well as sporty design in its S60 4-door midsize coupe, a car that played a starring role in a media program here.

Some Volvo dealers urge the auto maker to hype safety and nothing else in marketing and advertising.

“But if safety were all that mattered, we’d be No.1,” Maloney says. “We’re certainly not abandoning it, but we’re branching out.”  

Volvo is an established brand with high name recognition. “People know the car,” he says. The goal is to get more of them to buy it. “We want to keep the customers we have and get on more shopping lists, especially those of people who are moving up in the cars they buy.”

Volvo is strong in the Washington area, New England “and some of the money markets,” Maloney says.

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