Geely boss gets his way as Volvo strives to join top luxury brands
|Yang Jian is managing editor of Automotive News China.|
SHANGHAI -- Geely boss Li Shufu seems to be taking Volvo upscale, after all.
Shortly after acquiring Volvo Car Corp. last year, the chairman of Zhejiang Geely Holding Group had a dispute with Volvo's management about the Swedish brand's proper image.
Li wanted Volvo to compete against luxury-market leaders Audi, BMW and Mercedes-Benz. But last November, Li admitted that Volvo's managers in Sweden had good reason to resist.
Now, there are clear signs that Li has gained the upper hand. Last week, Volvo announced its new global brand tag line: "Designed Around You."
As always, Volvo's executives stressed product safety. But there was a new message, too.
The new campaign "summarizes our approach to understanding people, giving them a luxury experience that is a little more human-oriented ... " said Richard Monturo, Volvo's global marketing chief.
Monturo sounded vague about the phrase "luxury experience." But Volvo Senior Vice President Freeman Shen was clear about the company's direction.
In his speech, Shen said that becoming a top-tier luxury brand is one of Volvo's five goals to achieve by 2020.
"We will provide products that can meet customers' comprehensive needs, boost annual sales to 800,000 units and at the same time join the top-tier of global luxury brands, achieve above-industry-average investment returns and become a best employer worldwide," Shen said.
Volvo has a long way to go before it can challenge well-established luxury brands such as Audi, BMW and Mercedes.
In China, Volvo's sales are relatively low. In the first seven months, Volvo sold 21,718 units, about one-seventh as many as Audi. Moreover, Volvo lacks a flagship model to compete against the BMW 7 series or the Mercedes S class.
But Li is convinced that Volvo has a good chance to establish itself in the luxury market.
He sees Volvo as "a trapped tiger," meaning the brand has tremendous potential to succeed in China's luxury-vehicle market, given the market's growth and Volvo's rich heritage. In the first seven months, industry luxury-vehicle sales surged 30 percent in the country.
And Volvo already has begun climbing the luxury ladder in China. In July, for instance, the automaker launched the XC60 crossover in the country and sold 5,000 units in its first month.
Now the XC60 and the stretched S80 mid-sized sedan are outselling Volvo's S40 compact car -- evidence that the company is moving its image upscale.
Nine months ago, Li failed to convince Volvo's Swedish managers that the brand should go upscale. But judging from Volvo's new brand campaign, this time he has succeeded.