Australia may be the final market in which Volvo’s “hat on the parcel shelf” image lingers, according to managing director of the Swedish brand’s local car division, Matt Braid.
Despite its attempts to shake off its conservative image, Braid says price cuts are not a solution to the problem.
The big issue, he says, is that while it has few worries convincing people that its XC range of SUVs stack up against the Germans, it is getting far less traction in getting people to cross-shop the S60 with a BMW 3 Series or a V40 with a Mercedes-Benz A-Class.
In other words, the key goal for the company’s local arm now is to become better at getting what Braid calls “that second car in the garage”. It’s not about any great discrepancy in the quality of the product, Braid claims, but more about getting the word out there.
This means any price cuts on the horizon seem unlikely, however much expectations may dictate them, meaning the Scandinavian brand’s strategy here to price its car around par with its German rivals — though often with more equipment — will remain in place.
“We’re a luxury brand, we need to push the luxury credentials of the brand,” said Braid.
“You won’t see us trying to necessarily bring the brand down to where expectations are, we need to raise expectations of customers for what the brand provides them in this market as has been done in other markets around the world.
“We are the last market I think globally for Volvo to get rid of the view of the ‘hat on the parcel shelf’ etc, that seems to be still ingrained here to a degree, though it's changing year in year out.
“I think the racing (V8 Supercars series) has been a great indicator of that, and I think some aspects of the community are fine with it, they’ve moved on, though some parts of the industry I think keep trying to pull us back in.
“We don't hear it (so much) from customers, if you’re talking to a V8 Commodore driver then yes you’re going to hear that but we find most customers today are more receptive to the brand.”
Volvo’s problem does not lie in any lack of success with its SUV range, notably with its XC60 which this year owns 14 per cent of the luxury mid-sized SUV segment with 681 sales (compared to 1327 for the Audi Q5 and 1129 for the BMW X3). In relative terms considering the brand’s niche status, this model performs quite well.
Meanwhile the new-generation and long-awaited XC90 (cabin pic below) will arrives in Australia around May next year following its world debut in Paris this October, with a plug-in hybrid to follow later. And while the current version — once among the top sellers — is down 20 per cent this year largely on account of its advanced years, the new one looks poised to take it right up to the segment-leading BMW X5 on spec, tech and potentially price.
Mid-sized sedans and small hatchbacks is where Volvo has more “blue sky” to play with, according to Braid. The former segment is Australia’s largest for premium cars, and the latter is growing at a rate of knots, up 41 per cent this year, thanks largely to the A-Class (2245 sales year-to-date, up 115 per cent) and Audi A3 (1634 sales, up 205 per cent).
This year, Volvo has sold 366 V40s and a further 166 jacked-up V40 Cross Country models, which is about on target but beneath its rivals by a margin. This could be improved upon by the addition of a range of new engines. The difference is more pronounced in the sedan area, with 296 of its S60s sold, compared to 2079 Mercedes-Benz C-Class’s.
“It’s a perception I think in the sedans we need to change," said Braid. “The common perception on our products, S60 and V40, is that (they’re) probably more conservative than what they actually are, whereas if you look at sedan sales of Volvos and V40 sales in other markets, they’re on par with the SUVs.
“So we have to catch up and submit the brand’s credentials in those segments in Australia.
“We need to get that second car in the garage, and I think that the other competitor brands we deal with have probably done a better job than we have on that.
“We know when it comes to a family buying an SUV we’re going to be on the shopping lists, and we compete very favourably but when it comes to an executive going ‘I’ve got a family car sorted out but now what car am I going to buy for myself’… we haven't been on that shopping list.”