Volvo Pushing For Internet Car Sales

Decision 1 for Volvo last week was to end the company’s factory-backed participation in motorsport.

Decision 2 is a substantial shift in Volvo’s marketing mix that’s going to be very interesting to watch. Volvo is implementing a new plan called the “Volvo Way To Market” and it means big changes in the way they’ll do things.

The Volvo Way To Market can be summarised as follows:

Marketing tools

  • And increased spend on better defined and more focused branding.
  • Only three motor shows a year – Detroit, Geneva and Shanghai/Beijing. Volvo will also conduct their own major event in Sweden to court the press and push their new products and brand values. This will replace attendance at ‘minor’ auto shows in other cities.
  • A decrease in sponsorship activities, such as motor racing and other sporting activities. The only major sponsorship to remain (and get an increase) is Volvo Ocean Racing.

I really like the idea of limited motor show activity. It’s a massive spend and while they’re great fun if you’re involved, the jury is out on how many cars they help to sell. Most car companies now see motor shows as a chance to 1) engage the press and 2) peek down the trousers of their rival carmakers. These three are the shows that everyone attends.

Digital Leadership

This will be an interesting part for me. Volvo argues that people are doing their car shopping online and since the company is seeing the profits of doing business on the Web, it seems interested in opting for online cross channel marketing solutions to attract more customers who would like to buy their automobiles online. However, this is not just it! Volvo also seems to be making a huge investment in improving their old customers’ online experience–some of the ways that they are going to do that are written below.

The Internet Shop

  • Volvo will create an industry-leading website that promotes the brand’s values.
  • Volvo will create a new type of vehicle configurator, one that starts with a fully loaded car and allows the customer to customise it from there. Customers then have a video link emailed to them so they can see the car in motion.
  • Finally, Volvo will move to selling cars online, to compliment the dealership experience

The first two of those sound rather ho-hum. Every brand wants an industry leading website that promotes their brand values. Every brand wants a vehicle configurator that customers find easy and interesting to use. Right now there are only generic statements of intent. The whole notion turns on how Volvo will achieve this.

The final point is the really interesting one. Establishing online vehicle sales in parallel with the dealership sales experience. I firmly believe that there will be a reasonable selection of customers who will like the idea of ordering online. They’ll still want a dealership around to see the vehicle, maybe even for a test drive, but the idea of avoiding all the sales games and ordering at your leisure will resonate with some.

In order to cater to the surge in demand for cars through online orders, bringing out the best practices facility management would be necessary. The increase in demand would need a higher manufacturing volume of cars which could be achieved through automation practices in manufacturing units– to boost worker productivity as well as the speed of manufacturing.

This calls for some serious research on Volvo’s part in knowing how to pivot their offline customers to online sales-marketing techniques will most likely come into play, and a deeper understanding of demand generation vs lead generation is necessary to get the ball rolling in Volvo’s favor.

Which leads us to….

Dealerships

Dealers might fear Volvo’s proposed online push, but Volvo will argue that dealerships don’t make much money off the initial sale anyway. Their money comes from parts and services, and dealerships will still be needed for those activities. Additionally, car dealers may need to implement effective techniques in order to increase sales. One way to reach more audiences is by consulting with a company that provides SEO for the automotive industry, which enables dealers to rank higher in search engines. Another option is to use search engine marketing to generate more traffic by running advertising campaigns. It is likely that car sales will increase through such effective marketing strategies.

VolvoDealership

  • Volvo want dealers to become full-on brand centres. New dealerships will have a standard Volvo-designed presentation that emphasises the Scandinavian heritage of the company. Existing dealerships will be asked to refine certain details to do the same.
  • Example – Dealers will be asked to serve traditional Swedish fare, and drinks in Swedish glass. So instead of looking up a recipe for Swedish meatballs and going to a dealership to buy a car, you’ll now go to your dealership for Swedish food and then go online to order your car.
  • European dealership staff will be dressed by a funky Swedish designer. American dealership staff will be dressed by Will Ferrell. OK, I made the Will Ferrell bit up, but the first bit’s true.

Service

After hooking customers in with its tasteful yet all-pervading internet presence, Volvo aims to cosset them with a very personal service experience.

New vehicle customers will meet their personal service technician when they pick up their new Volvo and that technician will stay with them for their full period of vehicle ownership. Phone numbers will be exchanged, presumably along with Christmas cards and other niceties.

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Volvo seem to be going to great lengths to let everyone know that this is not a reduction in dealership-based sales activity. In fact, Volvo are going to increase their marketing spend by a reasonable sum in order to implement the Volvo Way To Market.

What will be interesting is to see exactly how it unfolds, and how it affects Volvo sales. Volvo will need to do some serious investment in online marketing to reach the right people. And when that’s done, their new website and configurator will have to be something special to get people to commit online.

Other companies will be watching, too. You can bet your bottom dollar that the Teutonic crowd will be very interested in how this goes for Volvo. It won’t take long for other companies to replicate this venture if Volvo proves it can be successful. As with safety, this is something that can be learned and then snuffed out as a differentiator in reasonably quick time.

I take my hat off to Volvo for having a crack at this (but please keep racing).

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15 Comments

  1. All depends on the product doesn’t it? And it also suggests they are trying to move more upmarket. The $64K question is how many of the traditional volvo owners they lose because they can’t afford to buy the car (the same problem Saab had to some degree) and how many conquests will they make from other luxury brands. Some of these techniques Lexus has already been doing (and Lincoln is trying the same technique in some markets too, with various degrees of failure and success) but to many people buying luxury, volvo is rarely on their radar.

    Its a shame they won’t be at the Washington DC auto show. Its one of the rare occasions I can get out of the office to check out the latest technology on the cars.

  2. I believe Internet Car Sales is a natural progression. There are several small and startup car manufacturers that cannot afford to establish dealer networks for sales, so they rely on the Internet for sales.

    There are so many things quietly happening within the transportation industry now that leads me to believe, we will wake up one day and a whole new transportation world will be upon us.

    We have been testing autonomous trucks to move freight for a couple of years now. SMART, has been testing autonomous cars in Singapore since 2011. Singapore, also has an autonomous bus and an electric Mitsubishi car that was converted to driverless.

    Between Uber, who is also quietly moving into freight and household goods transportation, the development of the driverless vehicles and the Elon Musk-like startups that are developing and testing new batteries that are already doubling the range of electric cars — change is already upon us.

  3. In some respects, I agree with what Starbird2005 has said, but it all depends on what your definition of luxury is surely?

    If by luxury you mean Mercedes, Audi, BMW etc then personally I believe Volvo can compete. If you mean Bentley, Rolls Royce, Maybach etc then I agree, they can’t. But how many people can afford a Bentley or Rolls Royce? The vast majority of people looking for ‘luxury’ will buy BMW, Audi, Mercedes and from personal experience I can say that my Volvo is the most luxurious car I have had. I think a lot of people have the misconception that because Volvo was owned by Ford they are Fords. They are not; well certainly not any Ford I have ever driven. (Not that there is anything wrong with Ford by the way.)

    People who can afford to buy and want to buy a Rolls Royce or a Bentley are not going to buy a Mercedes instead. People who can afford and want to buy a Mercedes or Audi may in fact be tempted to buy a Volvo instead. I did.

    I have an Audi. It is a great car. I have had three Audis in total and all, without exception, have been great cars. I also have a Volvo and, in my opinion anyway, it is one of the best cars I have owned. I could have bought Mercedes or Audi or BMW; I tried them all, but instead I bought Volvo. Why? To be honest, I wanted something else. Something that while popular, was not common. Something that offered that certain feeling of not quite following the mainstream; of not keeping up with the Jones’s. I last had that feeling with my Saab. Sadly as Saab are no more I had to look somewhere else and happily I found it at Volvo. I freely admit that I am a sucker for the whole Nordic/Scandanvian thing.

    I hope Volvo’s vision can been achieved. I too hope they change their mind about dropping out of motor sport but I can see where they are coming from. (Alfa Romeo, my other great motoring love, have never been the same since they dropped out of motor sport IMHO). I will be watching with interest as this develops and I for one wouldn’t mind at all buying my next Volvo online. After all, most of my shopping is done there anyway.

    Cuore Sportivo! (or Sports hjärta! as they say in Sweden)

  4. I agree with Allan. It’s a natural progression and I’m more surprised that it took so long. But I guess some structures (like car dealerships) are hard to change due tradition. They have in the past been the profitable link between manufacturers and customers. But today people even buy cloths and shoes online, so why not cars?

    I wonder if they gonna try it out first in Sweden, partly because of their reputation here (“I drive a Volvo. Always had, always will”, etc.) but also because of company car sales. People outside Sweden may not know this, but for major brands like Volvo, Audi, Mercedes, VW and BMW (and former Saab) company car sales account for about 70-80% of their new car sales here. Even the average number for all brands in Sweden is at over 60%. Sales figures and what brands/models sells would most likely look totally different here if buyers had to put up their own hard-taxed dough for a new car. The buying process for a company car is often a different one (and could also be regulated by your employer regarding brand, model, size, etc.) and I think it is very well suited for internet car sales.

  5. I look forward to this progression. Anyone in retail automotive (at least in the US) with any sense of the evolution of the automotive business knows that there are going to be great paradigm changes. When I started out in the 1980s, dealerships made healthy profits selling new cars. In fact, the commission I made per car selling a Saab in real–not inflation adjusted–dollars was much more than the total gross profit now realized in the sale of a new car. Diminished profits, almost to the point of loss, in new car sales started in the 1990s and accelerated in the internet age. Then dealerships realized that the remaining profit centers were fixed operations (aka parts/service) and used cars, which had always been profitable. We at charles River Saab were immune from that transition because our store had always concentrated on fixed operations, leaving the sales to all the other dealers in our area.

    Now, I can see the writing on the wall. Service departments are gasping for profits because the products are so much better than they ever were, and require minimal maintenance. Low margin repairs which were often relegated (happily) to the aftermarket, like oil changes and tires, are becoming vital staples. At the same time, the complexity of modern requires that when something does break, substantial technical ability is required. The rubric is becoming ever more complicated, and every aspect of fixed operations is going to get reinvented, I believe, in the coming decade. It will be hard to get dealership owners to ween themselves off the expected fixed operations profits, and for service employees to transition into this new landscape.Volvo is rolling out “Volvo Personal Service” which Swade mentioned. I like the notion of trying something new. My only question is whether it will generate the revenue required to pay the salaries top flight techs have come to expect, and the profits Volvo dealers have needed from fixed operations to keep their stores open.

    Change is good!

  6. Sounds like they hired a new VP of BS! Lots of buzz terms that look great in Powerpoint presentations, but very little substance.

    I guess Volvo needs a stronger online presence but, as you mention, that’s true of every brand. I really don’t think that starting their configurator with a “fully loaded” car will be a benefit. If anything, it will scare away customers who already think that Volvos are overpriced (that seems to be the consensus in North America). Sending a video link via email will totally backfire: it’s a cynical ploy to get your personal information in order to spam you later. Anybody who doesn’t figure that out probably can’t afford a Volvo anyway.

    I don’t think that many customers want to buy a car off the internet. Can you return it if the colour’s not quite right, or if you can’t get comfortable in the driver’s seat? The configurator is there to bring people into dealerships, armed with a basic idea of what they want. Of course, if you are shopping in North America, you need to take whatever they’ve got, but at least you’ll have an idea of what you would rather have.

    The whole premise of turning dealerships into Ikea wannabes is lame. Why not just partner with Ikea? If Volvo still made square wagons, you could rent shoppers a stylish ride home for their flatpack. This gets butts in cars, and targets people who are already favourable to modern Scandinavian design! Better yet, the VP who came up with that plan should just send their resumé to Ikea and realize their dreams that way.

    The “personal service technician” premise is old. Any dealership will introduce you to the service manager with instructions to call him “directly” if you need anything and the suggestion that he is your new best friend. He won’t be working at the same dealership in 6 months. Actual technicians don’t want to talk to you at all. First, they don’t get paid to chat. Second, if they wanted to deal with customers, they would have their own shop, or work for an independent.

    Now that the comedy is out of the way, my main objection with this plan is this: it says nothing about Volvo. You could pitch the same plan to any manufacturer with a few minor edits. I don’t see how it addresses any of the strengths and weaknesses that are specific to the brand.

    1. Volvo Personal Service is a reinvention. It eliminates the service advisors. Customers work directly with and uniquely with their technician, who also has other techs on his/her team. I don’t know how many techs will be comfortable with this set up; it is a real concern I have. Sure, any manufacturer can do this. But will they? The real question is whether it’s done right and if it will make a difference to customers such that they perceive a value which creates the desire to do business at a Volvo store. we shall see.

    2. While I think you make some valid points I totally disagree with your thinking that people won’t want to buy off the internet. Most of my purchases are off the internet but I try them out first. I go to a retailer of what ever product it is I want to buy and try it out. Touch it, feel it , look at it and if I like it I buy it off the internet usually at a much better price. If I can’t try it, I don’t buy it. Buying a car could and probably will be the same. Go down to the dealer and try it, sit in the seat make sure it’s comfortable, test drive it, check out colours, options etc, etc, then if you like, buy it. Collect from the dealers and if there are any problems back to the dealers for a resolution just as it would be if you bought it direct from the dealer anyway.

      When I bought my Alfa I specced the whole thing off the configurator. Everything. Colour, options the lot. Then I contacted my local dealer to get them to supply it. They couldn’t so I went to the dealer in Edinburgh who could. I arranged to test the car and then I placed my order. So basically I did it all at home except test the car. I even placed the order over the phone.

      I for one would be quite happy with this sort of process. What may be an issue is the trading in of your old car. Now if they can sort that out (and it isn’t beyond the wit of man to do so) then it would be very interesting indeed.

      Cuore Sportivo!

      1. Unfortunately, that sales model doesn’t work very well in North America because of the very long shipping times. Dealers would much rather sell you something off the lot than special-order a car that may not show up for 4 months. There are exceptions for special cars (Porsche and ultra-luxury brands).

        1. My guess is they’ll figure out a way to supply quicker. Now a days, you buy a laptop “built” to order and it ships in a day or two from China and you receive it in another couple of days. Cars won’t be that quick, but what’s to stop them building in a week, and shipping in another couple of weeks?

      1. Telsa is actually banned from selling in 26 states……that’s all because of dealer pressure. Unless someone can convince 26 legislatures to change their laws, or bring a successful federal lawsuit (perhaps on the basis of interfering with interstate commerce), it looks pretty problematic to me to have internet sales.