Central stock strategy at Volvo may take time

Volvo Cars is on the fast track to a zero-emission future. The Swedish automaker will launch a new battery-powered model each year as it drives toward becoming an electric-only brand by 2030.

The ambitious pivot means a transformation for Volvo's U.S. dealers as the company leans into a digital-first retail model for its fleet of EVs. It is also experimenting on the distribution side with a "central stock" model, where the automaker carries inventory on its balance sheet and delivers customer-ordered cars to dealerships.

Central stock addresses two dealer pain points — the heavy cost of floor planning hundreds of vehicles, and the complexity of predicting the right combination of options that will sell.

But Volvo Retail Advisory Board Chairman Ernie Norcross isn't fully sold on the advertised benefits of central stock.

While that model will help dealers slash floor plan expenses, Norcross is not convinced impatient American car shoppers will wait weeks for built-to-order vehicles to arrive from the factory.

The "see it now, buy it now" mindset has made Amazon's Prime delivery service popular, Norcross, owner of Volvo Cars Memphis in Tennessee, told Automotive News. "Most consumers want to sit in a vehicle, feel it, drive it, and then buy it right then. I don't see that changing."

But the wave of pandemic-fueled supply shortages has stalled Volvo's central stock experiment.

"When COVID and the supply chain crisis hit, all the rules changed," said Norcross.

The dealer predicts the central stock strategy will evolve into a hybrid model that addresses consumer buying preferences while reducing distribution cost and complexity.

"It has to work for the consumer, the dealer and the OEM," he said.

"It's like a three-legged stool — it won't hold water if one of the legs doesn't support it."