Volvo Cars’ new blueprint for future success
Half of all annual sales to comprise fully electric cars. One-third of all cars sold to be autonomous driving cars. Half of all cars offered to customers via a subscription service.
These targets form part of Volvo Cars’ new financial and operational ambitions that will position the company as a leading player in the global automotive business by the middle of the next decade.
Volvo Cars expects these initiatives to transform its connection to its customer base, with the aim to build more than five million direct consumer relationships by the middle of the next decade. This will also offer the company far greater potential to develop connected services and other services for customers.
“Our customers’ expectations are changing rapidly. This means that Volvo Cars is also changing rapidly,” says Volvo Cars’ president and chief executive, Håkan Samuelsson. “These initiatives will help transform Volvo from being purely a car company to being a direct consumer services provider.”
On the financial side, Volvo Cars aims to generate premium level profitability in line with other premium car makers, driven by increased sales and revenues across all three global sales regions, and a broader range of cars including sales to the new segment of autonomous ride-hailing companies.
The company’s improved financial performance will also be driven increasingly in the future by industrial synergies generated with its affiliated partner companies.
Volvo Cars expects to benefit from lower procurement costs, shared development costs and economies of scale alongside Polestar, its premium performance electric car brand, and LYNK & CO, the new global car brand in which Volvo Cars owns a 30 per cent stake.
“This paves the way for Volvo Cars to continue growing fast into the middle of the next decade,” says Samuelsson. “The company has been transformed since 2010 into a global premium car company. Now it is time for this transformation to be turned into a period of sustained profitability in line with other premium brands.”
Above: The New Volvo V60’s unconventional unveiling - at a stylish suburban home in Stockholm, Sweden.
Volvo Cars achieved record profits and sales in 2017, with a 27.7 percent increase in operating profit and global sales of 571,577 cars. The results marked the company’s fourth consecutive year of record growth, underlining the transformation of Volvo’s finances and operations since being acquired by Geely Holdings. It has also expanded its global manufacturing footprint and completely renewed its model portfolio in recent years.
The company will also continue its move away from traditional automotive industry events to focus on bespoke activities to introduce its new cars, technologies and services to media and consumers.
Recent new-car launches, for example, revealed the First Ever XC40 compact SUV at the 2017 Milan Fashion Week, the new Volvo V60 premium mid-size wagon was unveiled in the driveway of a suburban home in Stockholm, and the car maker’s new S60 sports sedan was presented at the inauguration of the company’s first US manufacturing plant, in Charleston, South Carolina.
As part of the company’s strategy to target a new mix of audiences and develop its own events, Volvo Cars has decided it will not attend the Geneva Motor Show in 2019.
“The ongoing change in the car industry is creating new audiences for Volvo Cars and new ways of bringing products to the market,” says Björn Annwall, senior vice president of strategy, brand and retail at Volvo Cars. “Automatic attendance at traditional industry events is no longer viable – we must tailor our communications based on how the options complement our messaging, timing and the nature of the technology we are presenting.
“We are not saying never to car shows. We expect industry events like the Geneva Motor Show to continue evolving and we may return in future.”
The company now enters a new phase with the strongest global car range in its history and will continue to increase its focus on innovation and services.