Q&A: Volvo Germany offers dealers additional incentives

Cologne. Dieter Laxy, 60, became Stefan Mueller's successor as chief executive officer at Volvo Car Germany in March 2003. In an interview with Automobilwoche he spoke about the Ford luxury brand's future strategy in Germany.

You have recently sacked sales director Bernhard Schoder and marketing manager Goeran-Carl Tamm. Who will be next?

A: The word sacked is correct but has a negative sound to it which is not justified. I want to make clear that both gentlemen have done a very good job. Further changes are not planned. I do not intend to start off an avalanche.

Q: Your decision to replace the key posts sales and marketing is not a response to Volvo's low sales figures at the beginning of the year?

A: I made those changes without taking into consideration the temporary drop in sales. I would have made this decision even if our sales had been 20 percent above the previous year's results. The main reason is to reduce the size of Volvo Car Germany's management board.

Q: So you are planning more redundancies?

A: For heaven's sake, no. A reduction does not always have to result in redundancies.

Q: You will have to explain that.

A: We are considering the possibility of early retirement. One colleague will leave at the end of this year at the age of 60. It is not sure yet if his post will be retained, as we still have a representative for the central regions and East Central European countries such as Rumania, Poland and Slovenia. We also have representatives for the IT department and for sales-planning and -development on the management board. It is also being discussed as to whether the dealer network department, which was headed by Rob van Rijswijk will retain a place on the management board.

Q: How many people will be part of the board of directors in future?

A: We are still working on the new structures. By the end of summer they should be finalized.

Q: And how are you planning to increase the Volvo sales?

A: At our dealer conference which recently took place in Frankfurt we reviewed the situation. It was an event aimed at motivating the dealers.

Q: You will not be able to satisfy your dealers simply by telling them to stick it out.

A: Of course not. We have also got additional sources for publicity. In addition to the current campaign focusing on the 50th anniversary of Volvo station wagons there will be several other campaigns, which were not planned originally. We will also support the dealers with local publicity grants. We will also develop more one-to-one marketing measures and organize events that will get customers to the dealers.

Q: How much money will you be spending on that?

A: A substantial sum. I will not give any details away to my competitors.

Q: Are you planning to take any other measures?

A: We will offer limited editions, which also was not originally planned. And to increase their sales efforts we will offer all our dealers additional incentives.

Q: What do they look like?

A: Target dates will be set. When reaching 90 percent to 120 percent of the target figures the dealer will receive additional bonus points and can earn between 2 percent and 4 percent extra margin.

Q: Other manufacturers increase the sales of vehicles with day registrations.

A: Not us. We have told our dealers that we do not support day registrations and higher than average registrations of demonstration vehicles and that they will not receive bonuses for those. I want the business to be clean and honest and don't want any cosmetic measures just to have a better reputation at head office.

Q: Shouldn't you have reacted earlier to the decreasing sales?

A: One always knows better afterwards. In the past three years Volvo has grown by 9 percent. At the same time the general market sales have dropped by 14 percent. The current low is mainly a result of the discussion over the taxation of business vehicles. Approximately 60 percent of our sales are with business customers. The diesel engines for the models S60, S80 and V70 have generated a high order volume and in the first few months of 2002 we had an increase in new registrations which was above average.

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