Volvo dealers call for ad blitz to spark sales
Ott: “Still underfunded”
After "disappointingly flat" sales last year, U.S. Volvo dealers are clamoring for a surge in advertising in 2013.
Volvo Cars of North America isn't spending enough on marketing, and Volvo dealers are worried, says Chip Ott, outgoing chairman of the Volvo Retail Advisory Board. Showroom traffic especially dropped off last fall, Ott said, and sales growth fell far short of the increase in industry sales in 2012.
"We need to get our act together collectively so that we can increase business," said Ott, who owns a Volvo store in Fort Washington, Pa. "Everybody's sort of floundering right now. We're a very concerned retailer group."
Volvo reported sales of 68,117 vehicles in 2012, up just 1 percent from 2011. It fell below the 71,000 that Volvo executives had targeted for the year. Industry sales rose 13 percent last year.
The U.S. product line is aging and shrinking. Though freshened XC60 and S60 models will go on sale in the second half of the year, they alone won't lift Volvo's prospects, Ott says. At the same time, dealers are losing a small-car contender. The C30 entry-level car was just dropped, and the C70 will be discontinued, probably by the end of 2013, he said.
The solution proposed by dealers? Better marketing and higher advertising spending this year. Volvo executives have told dealers that marketing gains are coming, Ott said.
Volvo is dropping wear and tear coverage from its Safe and Secure maintenance package and directing the savings to increased marketing, Ott said. Dealers aren't sure how much more will be spent, but Volvo executives have suggested the overall marketing budget could increase by as much as 20 percent this year, Ott said.
But that plan still isn't enough to fully right the sales performance, said Ott, who projects that Volvo can sell 75,000 vehicles in the United States this year. That's still far short of what he thinks the brand should be doing: a 1 percent market share and 100,000-plus in annual volume.
"I don't think it's adequate compared to our competitors," Ott said. "We're still underfunded in the U.S. if you look at our marketing and advertising. We're nowhere near where everybody else is."
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