Volvo CEO Hakan Samuelsson is more convinced than ever that the Geely-owned automaker needs to capitalize on the disruption shaking the industry.
Thanks to its smaller size compared with BMW or Mercedes-Benz, Volvo expects that half its global sales can come from full-electric cars by 2025, with one-third of its vehicles being fully autonomous by then.
A more immediate goal for Samuelsson, 68, is for Volvo to break its worldwide vehicle sales record for a sixth straight year. He discussed this and more with Automotive News Europe Managing Editor Douglas A. Bolduc. Here are edited excerpts.
Q: Is Volvo on track to sell 700,000 cars globally this year?
A: It's absolutely achievable this year and our ambition is to reach 800,000 next year. We have always said that when we reach that [800,000 units] we should also be as profitable as our premium colleagues, which means a margin of about 8 percent [by then]. We are on the way because we have never had such a strong product offering.
Volvo's German premium rivals are trying to save money by cutting costs. Does Volvo need to take similar steps, such as reducing staff?
Yes, but it will mainly be consultants. We have been reducing their numbers and squeezing them a bit harder. In addition, we are more frequently asking why we can't do a task or a project ourselves. We are also going to be more restrictive when it comes to hiring.
Can Volvo share figures on the planned cuts?
We have the numbers but we haven't communicated them externally, and we don't plan to because it could give the impression that we have to rely on cost cuts to achieve our strategy. That is not the case. Our success is coming from excellent cars.
The industry is moving quickly toward electric and autonomous vehicles. You have said Volvo should be at the forefront of the shift. How is the company reaching that goal?
We are more convinced than ever that being at the forefront of these so-called disruptive movements is crucial. As a small company, making this shift will help us achieve our goal of becoming more premium and being more relevant in the global arena. If we don't do this, then we would be following what others are doing or have already done. Disruption or change is a huge opportunity for a small company.
How is it easier for a company of Volvo's size to achieve this transition?
If you're a big company you might see all of these changes as threats, but we see them as an opportunity. With that as the base, I will probably never be satisfied with how fast we are moving. I would like to see us move faster, but it is also important to bring the entire organization with you.
What about the move toward self-driving cars?
When it comes to that, it is a bit more challenging technically than we originally thought. But we are still convinced our next-generation cars should have what we call Highway Pilot [which takes control of the vehicle on a highway]. We will be very careful to avoid bringing out something that is perceived to be automated and is not, and the driver overestimates the capabilities. We really want to deliver something that is as safe, or even safer, than the impression you get. That will come, first for usage on the highway.
And the shift to electrification?
We are well underway with models such as the full-electric Polestar 2 and the XC40 coming next year. We firmly believe there will be a battery-electric car market that is big enough for us.
Until then what we have is a very good solution: the Twin Engine plug-in hybrid. These cars can be driven roughly 50 percent of the time in full-electric mode. They account for about 10 percent of the sales in the model lines where the technology is available, which is a very high percentage.
Another area where I would like us to progress more is with the way we bring mobility to consumers.
We have traditionally sold cars to customers, but we believe they would like to have mobility in other ways. And it shouldn't be overly complicated.
They want the freedom to move. What will be very attractive in the future is paying a flat subscription rate for the product. You still get the freedom to move because this car is at your disposal. After three years, if you like it you keep it for three or four more years. If you want a bigger one, you change to a bigger one. If you don't want it anymore, you cancel the contract. That's what you get with Care by Volvo.
You have said you want Care by Volvo to account for a quarter of all of Volvo's sales. What are the numbers now?
We have a test in Germany where we want it to account for 5 percent. Right now we are maybe halfway there.
That's a long way from 25 percent. Is that disappointing?
That's why I would like to move faster. In Germany the target is 5 percent for this year. That doesn't seem like much, but we expect it to grow quickly. It could be like TVs or the Internet, which started off slowly but then grew very quickly.