Whatever happened to Volvo? That is a question that many fans of the Swedish car brand, virtually synonymous with safe driving, are asking these days as the company grapples with a comeback under new ownership by a Chinese car company.
Volvo CEO Stefan Jacoby says the company plans to double global sales to 800,000 by 2020, with half that total to come from China.
Chinese automaker Geely has money to invest. It has a plan to spend $11 billion over the next five years on new models and engines designed and engineered in Sweden, as well as added manufacturing in China.
“There is no question that we have work to do,” says Jacoby, who was hired by Geely to run Volvo last year. Jacoby had been head of Volkswagen’s North American operation before accepting the post. Part of that work is developing new engines with Volvo’s engines in Sweden. Presently, Volvo uses an adapted older Volvo engine that needs updating, a Ford-suplied four cylinder engine and a Yamaha-supplied engine.
The product lineup today consists of: the C30 hatchback, which starts at $25,722; the S40, which starts at $27,750; the S60, which starts at $37,700; the S80, which starts at $36,960; the XC60 crossover, which starts at $32,400; the XC90, which starts at $38,200; and the C70 coupe, which starts at $39,900.
Jacoby, a German, in some ways is doubling down on the strategy that many people think has diluted the brand’s image. He says future products coming out will embody the traits of Scandanavian design-simplicity and usability– that is evident in such familiar things as Ikea furniture. At the same time, though, he says, “Volvo is going to be a competitive luxury brand in every market.”
That will come as a surprise to Swedes. In its home market, Volvos have been positioned and largely priced to be thought of as “premium,” and affordable to middle-class households like Buicks in the U.S.
Jacoby plans to move the pricing of Volvos upward, adding models that are pieced North of $50,000, making sure they carry features found commonly in luxury cars.
Worldwide, Volvo was synonymous with being the safest car one could buy. It’s boxy shapes, safety innovations around technology such as seatbelts and collision protection engineered inspired a long running advertising strategy through the 1970s and 80s that rivals Volkswagen’s advertising in the 1960s for memorability. Volvo ads featured such images as an elephant standing on the car, cars stacked on top of one another to show how strong the roof structures of the car were; a truck stacked on top of a Volvo. And so on. Images of crashed vehicles with the driver’s compartment left totally in tact were commonplace.
Jacoby says the company has got to be more than “Mr. Safe,” if it is going to grow beyond what the Swedes or Ford were able to do. Jacoby believes that Volvo should be setting the example for the world on in-car electronic and communications design. He says that his 18-month old son is able to navigate using an Apple iPad.
“Apple has hit on a system of design that makes a very complex and robust piece of electronics easy enough for an 18-month old to figure out…I think Volvo can and should be the design leader in the automobile sector in this.”
The CEO says that one of the first things he set out to do when he took the job was start an internal study to find out what people think of the Volvo brand inside the company, as well as outside.
“We have something like 20,000 employees, and I think I got 20,000 different answers,” says Jacoby.
“We are going to focus on what we are and where we want to go, and we are close to having a global brand strategy we are going to start communicating.”
And the new Chinese owners are on board with all this? Jacoby says being owned by a Chinese “shareholder” is no different than what he has experienced at Volkswagen. “The chairman has his expectations just like any other owner,” says Jacoby. “But he also has a long term view and knows he hasn’t just bought a bunch of factories and tooling, he has bought an organization, people and a brand.”
Taking Volvo beyond mechanical safety is probably needed as even the company’s safety legacy can not always be counted on. Last year, the company assembled journalists in Europe to witness the company’s automatic braking system, which detects pedestrians and automatically applies braking to avoid tragic accidents. With cameras rolling, the system failed and the Volvo sedan crashed into the back of a parked truck that was standing in for a pedestrian. It was one of the most watched Volvo videos on Youtube last year. But convincing buyers that Volvo is anything but the car you want to buy before you drive new babies home from the hospitals is going to tak a lot of new product and image making.
