Q&A: TALK FROM THE TOP

Volvo sets sights on U.S. with product onslaught

Nicolosi: 2014 is a year to build brand awareness again for Volvo and position the brand for when new products come.
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With new engines, new technologies and new vehicles, Volvo Cars of North America wants to have 1 percent of the U.S. automotive market in five years.

That means sales of 150,000 to 160,000 units annually, significantly higher than today, said CEO Tony Nicolosi. He forecasts 2014 sales of 63,000 units.

Volvo's product offensive begins in the first quarter of 2015, when the redesigned XC90 debuts. By 2017, that car will be the oldest on dealer lots, Nicolosi said.

Nicolosi, 53, has been CEO since October. He was interviewed at Volvo headquarters in Rockleigh, N.J., by Staff Reporter Diana T. Kurylko on May 1.

Q: Last year, Volvo U.S. sales were down. What do you expect in 2014?

A: This is a transformational year; this is positioning us for the XC90 and the products that come off our new SPA platform. It is also a year to build brand awareness again, to position us for when new products come.

What is your 2014 sales forecast?

We are hoping to be up 2 percent from 2013, at about 63,000. Last year we did 61,000.

What is Volvo adding to its lineup to drive sales?

The V60 launch took place in March when we started to get our communications out. Starting with the V60 wagon, we have our Drive-E engines. They are all four-cylinder in displacement.

And the engines will be on all models but the XC90?

The new engines will go on all but the XC90. One displacement has turbo power and 240 hp, and the other is 302 hp and is turbo and supercharged.

We think this is the future of engine technology.

It is no longer about cylinders; it is about performance and fuel economy. We can achieve the performance of a six- and eight- with a four-cylinder engine. The days of counting cylinders are behind us.

Will the XC90 be followed by a renewal of your product range? How many years will that take?

Once you see us get to XC90 next March, doors open and in dealerships, you will see a new product launch on an annual basis -- and sometimes less than every year.

Within six months of the XC90 launch, we will have a plug-in hybrid version. We have told our dealers that by the end of 2017, the XC90 will be the oldest car in their showroom.

Can you bring the V40 wagon to the United States, and how soon?

No, the current V40 is on an old platform. We will wait until the new small platform, possibly in two years.

What else is new for Volvo in the area of technology?

The other thing that we are launching later this year is our new Sensus Connect HMI ... technology, which will be available in late June. We will deliver a human machine interface that is state of the art, and it will make the driving experience more pleasurable and make it a safe environment.

For instance, we will have 3D graphic navigation and advanced infotainment. We have developed a solution with AT&T which will provide our connectivity on the road. We have also worked with Ericsson, which will provide a cloud where we can offer our apps.

We will offer apps like Yelp, Glympse and also Wikipedia. We will have Park & Pay where, say, you go to New York, it's got your credit card and spot and you know where to go.

Volvo launched its own credit arm less than two years ago. How is it doing?

[Volvo Car Financial Services] has exceeded our expectations. It is delivering higher approval rates -- they are not doing stupid, foolish things. They have a broader credit policy. It is fully integrated with Volvo Cars from a marketing perspective. It is focused on returning customers back to the dealership to put them into another car. The credit arm did an independent survey of dealers and the overall response was that they were highly satisfied and were appreciative of the sales force.

Is Volvo increasing lease penetration? It was very low several years ago after Ford sold Volvo.

It has been a big plus on the lease side. The target this year is 42 percent; last year it was 35 percent.

Last year, Volvo finance controlled, between leasing and financing, close to 70 percent of the finance business. For the first year, that is really fantastic.

The company is still going through teething pain. We are in the game with the competitors. Having the in-house financial company is great; you can develop integrated offers.

Will Volvo add dealers?

We do not have any plan to add or delete. We have 304.

The most important thing we can do is improve our volumes and get the throughput up. That will come with new products.

What about the new facilities program? Volvo decoupled it from the margin program that it abandoned because of low sales.

We have a voluntary program that is not part of the margin structure. There are dealers who stepped up and are making investments.

We separated the facility program, and it is $500 a car for a full exclusive facility and $250 a car for a shared facility.

It is a three-year program that started Jan. 1 and will end at the end 2016.

Where will Volvo Cars of North America be in five years?

Our five-year plan is to get back to 1 percent of the market. Based on today's market, that is 150,000 to 160,000 units. Today, we are 0.4 percent.

Awareness is the biggest issue because of Volvo's lack of new products, yes?

We are not on enough shopping lists. A lot of it is that our showroom is changed. We do not have the S40, C30 and C70. What we need to do is invest strongly in our marketing. Volvo will have a presence in the media. In the past, we were sort of in and out.

Is the internal debate about whether Volvo will be luxury and compete with the Germans settled?

We are going to be luxury, and we will have the product with the exterior and interiors and connectivity to earn luxury. All of the key areas that define it, we feel, will be in our new products.

What's the target for improving Volvo's customer service and satisfaction ratings?

We work with dealers, and our dealers are focused on it. We identified the key drivers. Some of it is cleanliness of facilities, which is easy to fix, and some [issues] we are taking a deep dive.

We have a goal by 2020 to be in the top three in customer satisfaction.

Volvo once owned safety. Now every brand touts it. Does that matter?

We are still the leaders with safety, and you will see with the XC90 us coming out with world firsts. We will not just jump out and talk safety. You will see pieces of it all in our communication. We also realize Volvo owns safety. Do not forget we invented the three-point seat belt and gave it to the world.

By 2020, the vision is no one will be seriously injured or killed in a new Volvo. That is bold, and that is via new technologies.

XC90 will have lane departure, steering assist and animal detection at night. We will increase the content of boron ultra-high strength steel. It is lighter but more expensive. We will not relinquish safety.

You can reach Diana T. Kurylko at dkurylko@crain.com. -- Follow Diana on Twitter


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