Volvo: "Premium" No More?
Just two short years ago, Volvo’s press flacks were talking a big game about Volvo’s luxury aspirations, saying things like
We want to continue to compete with Mercedes, BMW and Audi. We’re working to improve the premium-ness of the brand and our products.
Even as recently as this year, Volvo execs have made much of the need to “not damage the Volvo brand.” But, having been bought by the Chinese automaker Geely, the Swedish brand has changed its tune. Autocar quotes Volvo’s new CEO, Stephen Jacoby, saying
Let’s ditch this talk about premium. It sounds like a pricing strategy and it’s got an expensive ring to it. We need to focus on elegant Scandinavian simplicity, our own unique identity, and not copy our competitors.
We could have seen this coming based on Volvo’s decision not to chase China’s booming luxury market with a large luxury sedan. Geely’s strategy seems to be to make Volvo a volume player in China, (with 800k global units planned by 2020 according to the WSJ [sub]) but this “anti-premium” approach may come as a bit of an unpleasant surprise to Volvo’s clientele in mature markets. Can you see Volvo surviving in the US and Europe without premium products?
More by Edward Niedermeyer
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With styling this bland and nondescript, premium is the last thing that comes to my mind!
I got a brand new 08 V70 during the financial crisis at about 35% off sticker. I still can't find anything that beats this car at that price ($29k). So... Yeah, if Volvo drops their premium pricing they'll do a lot better.
Volvo and Saab started out making cars for the common man, but were forced to retreat to the premium segment, especially by ever growing Japanese brands in the 80's and 90's. There simply was no way they could become big volume players and start pumping out Corolla, Accord or Golf competitors by the millions. It was a case of move over or get run over. Saab is of course already doomed, as their business plan demands an increase of the profit margin on each car sold, meaning they must become a true luxury brand, which I really can't see happening. Saab has little, diminishing or no presence in the US or China. Volvo on the other hand could perhaps still do something interesting with Geely backing them up financially, but I'm pessimistic.
Volvos days are numbered since being purchased by Geely. The Chinese and the Indians (Tata) are dooming some of the world's premium brands to oblivion.