Q+A: Lex Kerssemakers, President and CEO of Volvo Car USA
A look into Volvo's future.
Volvo has ambitious expansion plans, and is currently launching a new range of cars on its SPA architecture, and plans for a series of smaller cars on a new platform called CMA. Lex Kerssemakers has worked for Volvo since 1996, and is currently president and CEO of Volvo Car USA. We sat down with him at the 2016 Detroit auto show to learn more about Volvo's future plans.
You were at Volvo before Ford's ownership, through Ford, and now as part of Chinese company Geely. Talk me through the changes and what it's like at Volvo after some five years under Geely?
Geely, of course, was a big change. The remarkable thing Geely did—and it's what they promised when they bought us—is that they let Volvo be Volvo and Geely be Geely. They left Volvo to do the things they have been doing since 1927. They stuck to it. We had to develop new platforms and new engines. That takes four years—having patience for four to five years before things are really going to take off. That said, we've been profitable for each year since Geely's purchase and we've been running the company in a very autonomous way. We are run like a total independent company. That trust gave us all the confidence to do the things we needed to do, and that takes time. Geely and the chairman of Geely has a very long-term vision. He realizes and he knows that in the automotive industry it takes those cycles before you can start new things.
With Saab gone, Volvo must carry the automotive torch for Sweden. Is it hard to keep the "Swedish" DNA?
No. Geely is actually pushing us to be even more Swedish, if that's necessary. There is no doubt about that. We are now the only brand which can be Swedish.
Who do you view as Volvo's direct competition, both globally and in the U.S.?
Globally and in the States is pretty similar. It's the three Germans (Mercedes, Audi, and BMW) as the established premium brands. In the U.S.A., it's Lexus. Lexus plays less of a role, at least in our business, in Europe. But it's not only the premium brands. We know people are upgrading from the more volume-oriented brands.
Does the new Volvo S90 line up directly with a Mercedes-Benz E-Class or a BMW 5 Series in size, or is it a bit larger? Does Volvo plan to stick with the direct size comparison to the Germans (S60 to 3 Series, etc. )?
Absolutely (the S90 is a direct competitor). But overall, it's not necessarily the size in each segment for us to lineup directly against. In the past, we may have over-promised in some segments. But in the end, it's about technology. It's about the luxuriousness. It's about the materials you are using, the premium details and the drive comfort. It's about the technical features. With Pilot Assist, we are the first company to offer any sort of semi-autonomous driving features as standard in the world—not an option, standard! This shows the direction we are heading. The safety features, the autonomous drive, the infotainment system, the well-known seats and interior—that's what makes a Volvo.
We are a global brand. We should have offered the V40 in the U.S.A. There's a market in the States. Whatever Volvo is going to make in small cars, we are going to bring to the U.S.A. I can't be more clear. We're a global brand with a global product portfolio. Whatever cars Gothenburg develops will be able to be sold in the rest of the world.
Do smaller products than an S40/V40 or XC40 offerings make sense?
I don't think we are working on that at the moment. It's a C-platform with 3-cylinder and 4-cylidner engines. With that, you cover a big part of the market.
Does it still make sense to build cars in Sweden or is Chinese production the future?
We need to be in Sweden. We need to be where the market is. That's why we put so much effort into having the factories in Europe, the factory in China, and a factory in the U.S. But you can never only produce the local cars in the local factory. We are a global brand and we'll use the global footprint. In the end, you want a factory in many continents and now we have a factory in many continents
Does the Volvo V90 and other Volvo wagons makes sense for the U.S.A.?
As a product planner in my previous job, I've said many times that at a certain point Americans will love estates (wagons) again. There's an all-new generation coming in and they will start to see the practicality. Yes, it's a small segment but it's heavily dominated by Volvo. The V60 is doing the job we wanted it to do. The answer is, the V60 works and we will continue to sell it. So, of course, we look at having the V90 in the U.S. It's our heritage. I think it would be very strange if we don't offer it in the States. We'll see what happens.
Does the market understand the 3- and 4-cylinder future of Volvo (no V-6 or V-8 engines) and are customers OK with it, especially in the States?
When we took the decision in 2008, we believed in it. What you see now (with others offering smaller turbocharged engines) is a confirmation that we're on the right track. We use electrification to get the extra bit of power. We don't feel like the customers don't want the performance but we deliver it via electrification on top of the standard output (of the engine). That top bit of the market—the V-8 market—is normally only 4-5 percent. We all look at it and think it's great. It's very inspirational but it's a very small part of the market. So, we do that in a very environmentally-friendly way. We offer the performance of a V-8 with four-cylinder turbo technology. It's the right way to go and others are doing the same. We are just probably two years ahead of the rest.
What is the future of diesel for Volvo in the U.S.?
We never put diesel in the U.S. We never went down that track. We said plug-in hybrid is our diesel because it offers torque and that's what the customers are looking for. They are looking for torque and fuel efficiency. With four-cylinder turbos and plug-in technology, we deliver both.
What about Volvo and EVs?
It's a long-term vision. Absolutely. But we take it step-by-step. From a volume perspective, we believe a combination of a combustion engine and electrification is the right solution for a company our size. But we are clever enough to do it in a modular way. If the market is increasing for a full-electric vehicle, then we are ready. We presently have an EV planned for 2019.
What about Volvo and autonomous technology? There seems to be lots going on for you in that area.
We have our Vision 2020—nobody should be seriously injured or killed in a Volvo by the year 2020. We started that in 2007. It's quite a statement. We have passive safety, active safety, etc. In the end, we know the biggest route cause of accidents is human behavior. That part we need to eliminate. We see autonomous drive as a way to help us reach our Vision 2020—not to read the newspaper or do your crossword (as you drive). You can't just dump autonomous driving on the market because the customer has to get used to it. We started in 2008 with City Safety—autonomous braking. We then added pedestrians, cyclists, and now big animals (safety features). Then the XC90 had Pilot Assist and now the S90 has the latest Pilot Assist as standard equipment. So, we keep building on it and slowly but steadily get all the elements in. In 2017, we start in Gothenburg (Sweden) with 100 real customers on certain tracks (with full autonomous driving). It's a big thing. But we don't see this replacing the steering wheel. I see a very polarizing discussion with people saying they want to drive themselves. It's not about driving yourself or not. It's about not driving yourself with it's ultimately boring to drive yourself. If you're on an exciting road, then you drive yourself. It's like switching on the TV. If you don't like it, you switch it off.
The Germans have their performance brands (AMG, etc). Volvo has Polestar, which isn't nearly as strong of a brand as AMG, etc. What is the future of Polestar or a performance brand for Volvo?
We're just starting with Polestar. To me, Polestar is fantastic and a perfect fit. When you have your basic business of fuel efficient engines you can allow yourself to have something a bit more exciting. To me, the ultimate Polestar car is a combination of combustion engines and electrification or full electrification. If shows that you can make dynamic, high-performance cars by not necessarily only using traditional combustion engines. We have to think about it—how we're going to further develop it. It needs to be a Volvo. It should reflect Volvo.
Does a dedicated performance Volvo model make sense?
Good question. We have not resolved that question yet. At the moment, it will be Polestar Volvos.