You couldn’t help feeling blue when the CEO of Volvo‘s U.S. operation, Anne Bélec, announced that the Swedish firm – sole survivor of that lofty train wreck known as the Premier Automotive Group – would be tightening its belt here in 2008, the better to deal with eroding sales volume, which peaked at 139,000 units in 2004 and fell last year to about 106,000. Clearly, this is the wrong direction for a sales arm that once was laughably committed by its Fordly overlords (overfords?) to increase annual sales by 150 percent.
But then, all of the PAG brands were given ridiculous sales targets in the impossibly giddy Jac Nasser era. And the untimely demise of the U.S. dollar versus the euro (and just about every other major currency you can name) hasn’t helped companies that are selling cars built in Europe one bit. It might not be as hard for Volvo to sell cars as it is for Jaguar, Volvo’s former PAG sibling, but it ain’t easy.
That’s why we’re giving Volvo’s latest American cheese, the French-Canadian Bélec, the benefit of the doubt in terms of her plan to shutter unproductive Volvo dealerships. We’ll understand, if not celebrate, her desire to trim the brand’s modest 334-person U.S. staff. No one wishes for anyone to go wanting for work, but even the smallest corporations can bloat with middle managers. Sometimes, reality is the best guide for business planning. There’s no use pretending people are buying your cars when they’re not.
But I think the Volvo brand has the most amazing potential to sell more cars. Thus my disappointment turned to disbelief when I learned of the centerpiece of Bélec’s bold campaign to restore the company to health. Someone’s had the brain wave that Volvo must no longer focus on its smaller models but instead must work its big cars and SUVs, with their promise of higher margins.
In other words, they’ve got it exactly wrong. See, we love Volvo’s smallest car, the new C30, so much that we named it an All-Star for 2008. And what’s being proposed is a frontal assault on the C30 and the related S40 and V50.
It makes me wonder whether Bélec has been out of her old assignment – as Lincoln Mercury‘s general manager of marketing – long enough. Bigger margins? It worked great for Lincoln with the Navigator, right? The margins were huge. Oh, wait a second – they used to be huge. Isn’t this a philosophy that’s crucified Ford before?
And as for Volvo’s SUV, the XC90? It’s already past its sales prime. Margin-wise, Volvo’s restyled large car, the S80, was an instant never-was at its 2006 relaunch, because sales-wise, it was an instant stiff. So forget margins. And forget selling lots of S80s. The S80 might cost twelve grand less than a Mercedes-Benz E-class, but it feels every penny. Recap: Volvo’s large cars and SUVs aren’t fit to hit the ring, but this is the forum where Ford proposes to realize its dreams. Dumb.
Volvo needs to be seen as an environmentally sensitive builder of small, safe, premium automobiles. Psychometrically, that’s historically more what the brand has always been about (not SUVs), and it’s where Volvo’s market is (not SUVs) and where it’s headed.
Like the C30, the V50 wagon ought to be a star. Easily one of the sharpest-looking wagons in years, the V50 is not gigantic, but it will serve many of those who once bought V70s – and, before that, the 240 series and the 145 and 122 wagons with which the brand built its indestructible reputation for indestructibility – just fine. If only Volvo would market them for real.
The current mid-size S60 is a good car in Volvo’s traditional mold. The model has been shedding sales volume at an alarming rate lately, but it hasn’t been significantly refreshed since its introduction – eight years ago! Come on down, self-fulfilling prophesy! Better yet, Volvo is going to reintroduce its R line, but instead of the serious performance package of yore, R will now denote a series of trim options. Oh, dear.
What Volvo needs is to return to its own first principles, not Lincoln Mercury’s. Here’s how: Find a hot European turbo-diesel engine in the Ford parts bin. Stuff it into smaller Volvos. Make sure they get 40 mpg and a turn of speed, give otherwise brilliant interiors a touch more depth of quality, and offer a decent lease. Enough Americans will line up to buy these cars for something close to the $30,000-plus apiece that Ford would like to charge.
Let Volvo be Volvo.