Volvo No Longer Trying To Be Mr. Safe Guy
Swedish Automaker Now Owned By Chinese Seeks True Luxury Image
The brand's changing image and decline has happened almost imperceptibly over the last decade. Consider that the unthinkable, for Volvo, occurred recently with hardly a ripple of attention in the U.S. media -- the company said it would no longer import station-wagons in the U.S.
"It's hard to believe," says Bill Henry, a 54-year old owner of a V70 wagon that Volvo stopped importing last year. "I have owned two Volvo wagons, and my parents had them too...what happened?," asks the Toledo, Ohio accountant.
The answers: Not only have baby boomers, and Generation X behind them, not exactly had a love affair with station wagons, but Volvo has been somewhat schizophrenic when it comes to its image, as well as the kinds of products it has been bringing to market. The company launched a once popular SUV, the XC90, but that vehicle is now a decade old and still a couple of years from being redesigned. It never developed a minivan, which replaced the station-wagon with many U.S. families. And it has over the last decade flirted with trying to jazz up its image with "performance" sedans and convertible coupes. Perhaps the worst decision the company made was not locating a manufacturing facility in the U.S. when it had the opportunity under ownership by Ford Motor Co., leaving the vehicles to often be priced out of range for many would-be buyers as the U.S. dollar weakened against the Euro.
Lost Years Under Ford
Volvo was certainly not helped the last five years by being part of Ford Motor Co. before being sold to Zhejiang Geely Holding Group Co. last year. Though Ford benefited by adapting, for example, a Volvo sedan engineering platform into several Fords including the Taurus and Flex, Lincoln MKS and MKT, Volvo didn't fare as well. Indeed, the gas-electric hybrid powertrain that went into the Ford Escape was largely developed by Volvo, but kept out of Volvo vehicles.
Volvo had been on the selling block for two years before Geely stepped up. Ford didn't invest in the company during that time, and was not investing much in it for four years before that as it went through its own financial struggles and was investing what money it had in the Ford brand.
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.
Making Volvo True Luxury
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.
This ad from the U.K. in the 1980s is typical of Volvo's flare for the dramatic:
In the U.S. and Europe, Volvo had become so synonymous with safety and protecting children that Volvo was a one-time sponsor of the La Leche League, which is an organization that promotes breastfeeding and has a wide network of communications with new mothers and mothers-to-be.
In the 1990 film, Crazy People, starring Dudley Moore as an ad man, he puts forth his strategy for Volvo: "Buy Volvos. They're boxy, but they're good."
"Volvo has been one of the most trusted brands in the world," says San Diego-based marketing and design consultant Rupert Riley. "Trust comes from clarity with brands, and Volvo has been anything but clear in its design and communications over the past decade or so."
No More Mr. Safe Guy
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.
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