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Volvo brand image, strong product aiding local success

Volvo’s strong sales performance in 2018 has been driven by the XC60 and XC40 SUV offerings.
Tim Nicholson
Contributing Journalist
GoAutoMedia

9 Nov 2018 • 6 min read

Volvo Cars Australia (VCA) believes its strong portfolio of recent product coupled with its increasingly ‘cool’ image are the key factors in achieving double-digit sales growth in 2018.

Through October, sales of the Swedish brand have climbed 44.2 per cent year-on-year to 5616 units, largely helped by its XC40 and XC60 small and medium SUV pair.

The growth comes despite an overall market downturn of 1.3 per cent, while sales in the premium market have also slid.

VCA managing director Nick Connor said the brand had a tendency of bucking market trends, having previously recorded strong sales performances in down years.

“This is a product-led industry,” he said. “I also think – and I’ve seen this over the years before with Volvo – we’re slightly counter-cyclical when it comes to sales. And I think there’s something about our brand positioning that really helps us.

“When things slow down a little bit, and people aren’t making as much money as they were, there are always some people who are beating the trend. And I think the Volvo brand isn’t particularly flash. I think it’s sort of slightly understated and we’re fine with that.
 
“And I think, if you’re going to buy a new car, it’s almost more acceptable to buy a new Volvo than it is to buy other premium brands. And we saw this until 2008-2009 in the UK, when the financial crisis hit and people stopped buying new German premium product and British premium product.
 
“They still bought our cars. In fact, we had one of our best years in a long time. 

Through October, sales of the Swedish brand have climbed 44.2 per cent year-on-year to 5616 units. Through October, sales of the Swedish brand have climbed 44.2 per cent year-on-year to 5616 units.
 
“And I think that's partly because it was sort of the acceptable way to spend money, without being not too flashy – functional, but actually a still very high-quality product. So I think our brand helped us there. And I think in this market as well.”

Mr Connor said the brand’s values such as environmentalism, functionality and safety resonated with customers now more than ever, while its stylish Scandinavian ethos was an added bonus.

“So yes, I think suddenly Volvo as a brand is cool, Scandinavia is cool, and I think we happen to have, as you currently said, killer products at the same time as well.”

He said he expected Volvo to finish 2018 with around 6500 to 7000 sales, meaning it will exceed the 6000-unit tally in Australia for the first time.

Volvo is targeting 10,000 annual Australian sales by 2020, but Mr Connor said that any growth for the brand would have to be sustainable.

“I always say ‘any fool can sell a car’. And it’s only partly true actually these days. But, you’ve got to make money doing it. And I’m much more interested in us and our dealers selling cars positively than I am about hitting some vanity number that makes us all feel good, but doesn’t make us any money.
 
“I think we need to accept that the brand needs to grow in this market because actually where we were isn’t sustainable for them or for us. And it’s not even great for consumers either because they want an infrastructure that supports the cars that they bought. 
 
“So I think 10-12,000 units a year over the next few years. We have a very viable business model in Australia. We have enough coverage to support existing and future customers. And dealers can make a sensible return with that sort of throughput.
 
“If we do 9500 (sales), we haven’t failed as far as I’m concerned. That’s still a great result if everyone’s been able to make some money and keep customers happy at the same time.”

The XC60 medium SUV has been the brand’s best seller this year with 2367 units, followed by the XC40 small SUV with 1200.

Would you consider a Volvo over the likes of an Audi, Mercedes or BMW? Tell us what you think in the comments below.

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