OJAI, Calif. — Volvo, the Chinese-owned, Swedish-bred carmaker, has spent years refreshing its lineup and fine-tuning its retail and manufacturing operation, and is ready to re-introduce itself to global consumers.
“We have been through a hell of a transformation,” said Anders Gustafsson, CEO of Volvo Cars of North America.
With the redesigned and, now, American-made S60 sedan hitting dealership lots in the coming months and the V60 wagon arriving early next year, the company’s product lineup is nearly completely refreshed. And Gustafsson, fresh off a retail roadshow where he met with 208 dealers in six days, is confident the company is on the right path.
But that transformation hasn’t come without bumps in the road. The carmaker’s XC40 crossover, a new segment for Volvo, was well received by critics and consumers, but the company misjudged production capacity and is nearly sold out, hurting the potential of Care by Volvo, the subscription car service Volvo launched alongside the XC40. And its just-opened South Carolina plant producing S60s has had to weather a hurricane and reconfigure its export plans amid escalating trade tensions between China and the U.S.
The fine-tuning has already begun, Gustafsson said. Volvo will begin looping retailers in earlier for Care by Volvo and utilize the service for used cars as customers renew subscriptions after one or two years.
Staff Reporter Shiraz Ahmed sat down with Gustafsson, 50, last week outside Los Angeles.
Q: What is the consumer profile for the S60?
A: Someone that would like to drive a fun car that’s easy to drive — that’s the focus group. We don’t have any gender or age included in that. We have 360,000 S60 customers right now. Of course, we want them to enjoy the S60, but the most important thing is we want new customers into our brand.
You now have a full lineup of cars, and Care by Volvo has been launched. What’s the next step?
Our retailers need to be on board, because we need to do this together. We know from our first sales, our retailers have been involved in one way or another. The success of Care by Volvo is based on that. So we’re going to change the program a little bit. We’re going to include them a little bit earlier in the process, so we can take care of all the questions that we receive from customers.
What’s better for a dealer: to sell a car, to lease a car or to go through Care by Volvo?
First of all, we decided to launch XC40 together with Care by Volvo. PR-wise, an extremely good decision. From an operational point of view, not a good decision, because the car is close to sold out.
Now when we’re coming to the launch of the S60 — where we have our own plant in the U.S., where we don’t have any production constraints — it will be far better.
The XC40 was a brand new segment for us. We didn’t have any customer base to work with. The S60 we have 360,000 owners out there that we can massage and call them and work with them, because they’re already in our family.
If you don’t have production capacity, from our retailers’ point of view they can make more money on the normal way of buying a car.
The S60, we have the production capacity and the brand is stronger, but I don’t think the margins are different based off the channel. It’s the same for the retailers, one way or another.
How will the South Carolina plant be affected by tariffs?
The Charleston plant is structured for 50 percent export. That was the number that we worked with when we made the decision to invest in the plant. The tariffs are not going to help with that number. But based off tariffs that exist today between China and the U.S., this car will be exported to Europe and the Middle East and Africa. And then we can see how we’ll leverage the production capacity.
What about trade and the successor to NAFTA?
We had a good strategy before, being so focused on the U.S and having a plant here and how we’ve built up relationships with our suppliers. We practiced with the S60. The big volume car with us is the XC90 — we go up to 150,000 cars. Then, of course, we need to have a supplier chain that’s much more advanced than we have today. The suppliers based their calculations off volume, and when they see our volumes and new cars, they believe in the Volvo cars strategy in the U.S. with or without tariffs.
