Anything, in other words, to get away from “b” words like boring, boxy or banal. Indeed senior executives at Volvo rattle on with great gusto about the car brand, using terms like flair, design, driving-experience and pleasure.
“Look”, says Lex Kerssemakers, senior vice president of product and business strategy, “if we have an image of being able to produce a safe and robust car, well, that’s something we are proud of and will do all within our power to maintain. But our challenge is to keep this image, while at the same time creating some emotion in respect of the brand. This is something which we seek to deliver via our designs and driving characteristics but also through our communication strategy and PR.”
It is as well not to dismiss the priority given to safety quite so speedily. It was Assar Gabrielson and Gustaf Larson, the founders of Volvo in the 1920s, who set out with the vision that “cars are driven by people—the guiding principle behind everything we make, therefore, is and must always remain safety.” Volvo has been true to these words ever since from its pioneering introduction of the laminated windscreen in 1944 right through, six decades later, to the innovative Intelligent Driver Information System (IDIS), which helps to reduce a driver’s mental workload in certain stressful driving situations.
Moreover, the concept of prioritizing safety has a different resonance according to where you might happen to find yourself in the world. Kerssemakers explains:
“In the European market the message was coming through to us, loud and clear, ‘could you please stop talking about safety so much, because it is stopping people buying Volvos.’ Whereas in the United States, post 9/11, safety is again a very hot issue. A reaffirmation that the Volvo is a very safe car is exactly what people want to hear and is the major buying point. That’s a pretty important factor to bear in mind when you consider that more than a quarter of the 415,000 cars we sold in 2003 were sold in the States.”
Volvo’s Sven de Smet, director brand strategy chips in, “If you step into a BMW, its all about driving pleasure. Of course they also have air bags and crumple zones just as we do. But why people buy a BMW is not because it’s a safe car. So we have to learn from that and evolve; although I will be the first to admit that it’s difficult to reinterpret what you are all about. It is our challenge to interpret functionality in an exciting way.
“The old Volvo 240—the classical box on wheels—did everything a family with 2.4 kids and a golden retriever can want,” de Smet continues. “But our current top of the range XC90 Executive, which is a rugged but sophisticated all-road vehicle, and which happens to be a big hit in the States, does exactly the same thing—albeit packaged entirely differently. It’s a question of reinterpreting our old values and adapting them to the modern age where driving pleasure is the key. Simply getting from A to B safely, as my parents sought to do 25 years ago in their Volvo, is just not good enough.”
Of course the proof of the pudding is in the driving. One doesn’t need to look too hard to see that Volvo has indeed been successful in blending together the twin concepts of safety and spice. Rave reviews from car experts and enthusiasts abound.
Still good reviews are not paying customers. Although the company remains Sweden’s leading exporter, it is still a small player on the global car stage, with considerably less than one percent of the worldwide market. (Of course Sweden is the unsurprising exception to its market share where every fifth car sold is a Volvo.)
Andrew Conway, a London-based optician, is middle-aged, married, with two teenage daughters, and a fair share of disposable income. Precisely the type of new customer Volvo is looking to attract, he splashed out around US$ 40,000 for a new Volvo C70 convertible. Conway’s father had driven a Volvo some two decades earlier, and Conway explains, the new car appealed to him for the combination of beauty and smarts: “I simply thought that the C70 was a wonderfully stylish car. For the money, it’s great value and a beautiful, elegant car. It looks great, feels great and performs superbly.”
However, he continues, “The reputation Volvo has is generally for cars that are tough, safe and reliable, but which cost a fortune to maintain. My experience with the C70, alas, has done little to dispel this. Servicing costs are ludicrously high, verging on the prohibitive.” He concludes by saying that, “Much as I love my car, I would think long and hard before buying another for that reason alone.”
Another problem for Volvo is a lingering image of frumpiness. De Smet’s strategy is to get drivers into showrooms, behind the wheel, and out onto the road. “Because that is when they will say ‘wow.’ That is precisely the moment when they will see that we have changed at Volvo, whilst at the same time remaining true to our traditions and values.”
In 1999, the automaker became a wholly-owned subsidiary of the Ford Motor Company, joining Jaguar, Land Rover and Aston Martin, in Ford’s premium car division. Sales were up by two percent for 2003, but for the company to be sustainable it needs to be producing around 800,000 cars per year—in keeping with BMW and Mercedes, both of which are well over the one million mark.
(The Volvo brand name is owned by Volvo Trademark Holding AB, which is owned jointly by the Volvo Car Corporation and AB Volvo. In other words Volvo trucks and buses are an entirely separate entity, unrelated to Ford, but still using the Volvo name. This concept of dual brand stewardship is rather unusual—and in order to ensure that the interests of the brand are not diluted in any way a brand committee, consisting of both legal entities, meets regularly to ensure that both arms stay loyal to the Volvo heritage and are talking the same language in terms of overall strategy. In fact there is ample evidence of a mutually beneficial relationship having emerged. Tens of thousands of Volvo buses and trucks on the road provide good brand visibility, while Volvo Corporation manufactures luxury cars providing a certain cachet for the buses and trucks.)
“Ford is investing heavily in us,” Kerssemakers says, “but you don’t need to be a financial wizard to know that we need to keep up our own pants. We need to generate our own revenue to finance future products. And yet our core strategy has not changed—in fact Ford has given us the financial and human resources to strengthen and further implement what it is we are setting out to achieve.”
“That’s all very fine and dandy,” responds Bill Thomas, deputy editor of Autocar magazine in the UK, “but Volvo are nevertheless in something of a rut at the moment. They really need to take another step forward. Their new models are really very similar to the S80 that was introduced six years ago now. They have got to move this re-modelling forward another step now—although of course I don’t know what that step is going to be.”
The cars, he continues, are “all a little bit samey. Their models are good looking, I admit, but if you compare them with the new BMW 5 series, for example—well, there just is no comparison because that really is a handsome, cutting-edge car. BMW have moved the game forward again. Volvo has got away from the old box shapes, that’s true. But having done that they are now in danger again, in my view, of becoming ever so slightly stale.”
Kerssemakers knows perfectly well that the stakes are high for Volvo cars. Ford might well be underwriting future plans for investment and development, but it goes without saying that it is not part and parcel of today’s business practice to hand over a blank trans-Atlantic check book. Volvo’s strategy for sexing up its safety legacy had better be the right one.
“If we screw up,” Kerssemakers admits, and get as much as one single car wrong, then we’re dead in the water. Bankrupt. It’s as simple as that.”
Interestingly, Volvo’s current global brand tagline is “Volvo. For Life.”