Report: Volvo Dealers Respond Negatively to Digital Retail Strategy

Matt Posky
by Matt Posky
report volvo dealers respond negatively to digital retail strategy

Last week, we discussed Volvo Cars’ plan to transition to an online sales model as a larger quotient of its product becomes electrically driven. As luck would have it, the concept hasn’t been a runaway success with auto retailers. Vehicles becoming increasingly digitized, combined with the unparalleled consumer access offered by the internet, has made numerous manufacturers wonder why the dealership role couldn’t be diminished. After all, Tesla has done alright without a traditional sales network.

But Tesla didn’t have a gross of existing showrooms ready to make a fuss. Volvo has nearly 300 and dealerships are reportedly voicing their concerns as the manufacturer does what it can to assuage fears about the possibility of their being put out of businesses in the coming years.

It’s not new ground; showrooms have been expressing concerns since Volvo introduced its subscription program in 2017. Numerous dealers alleged that the automaker had violated state franchise laws by placing themselves into direct competition with their own dealer network. But Volvo tweaked the program so it would remain within the legal framework of most U.S. states.

This time around, the stakes seem a little higher. Volvo shops are not complaining about losing relevance in 2030 — the final year of the company’s planned conversion to an all-electric brand. They’re contemplating a world where they’ve been scaled down into little more than delivery hubs for customers that did their dealings with the factory online.

“Dealers always want to control the consumer experience from start to finish,” said Volvo Retail Advisory Board Chairman Ernie Norcross explained in an interview with Automotive News. “If we don’t control the buying experience, how are we anything but a delivery and service center?”

Norcross, who also owns a showroom in Memphis, TN, added that franchisees have come to him in a state of dismay over what the future holds for their business. It’s becoming a familiar tune as increasingly more automakers toy with the idea of pushing online sales, often starting with EVs. There’s a clear worry among dealerships that they’re gradually being forced out of the industry while manufacturers move in on their territory.

“Will the margin compensation for [battery electric vehicles sold online] be the same?” Norcross mused. “We are currently having that conversation.”

Volvo CEO Håkan Samuelsson has already signaled that it’s to be full steam ahead, however. Going electric and swapping to digital sales are now essential aspects of the brand’s long-term strategy.

“I am totally convinced there will be no customers who really want to stay with a petrol engine,” he explained to the press last week. “We are convinced that an electric car is more attractive for customers.”

Though he suggested that dealers will still play an important role in informing customers about the car, even if they won’t need to know as much about financing or how to write up a lease agreement (as that will be done by the factory via the internet). Meanwhile, Volvo Cars USA CEO Anders Gustafsson has been trying to convince salespeople that their jobs will remain intact as he frames everything as an exploratory initiative to test the viability of the online retail program.

“We have been very clear with that,” he said. “We will, of course, push things a little bit and see if we can develop this industry, especially related to digitalization.”

Ultimately, we’re inclined to buy into the premise that this is a trial run to see if the digital model works. But a successful test would seem to indicate a sort of lingering death for the traditional dealership. At the very least, staffing requirements will be scaled back immensely as more people do their business over the internet. The logical conclusion to this program brings us back to those concerns shared with Mr. Norcross, where dealerships just end up as corporately sanctioned service centers.

[Image: Volvo Cars]

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  • Talber8h39 Talber8h39 on Mar 09, 2021

    One strange thing I learnt about the pandemic... people are nostalgic for 2003-2004 and want society's values from then to return, and, yes, this includes car dealers. Yes, really... people seem to think those were better days, socially, if not technologically. Apparently people were more satisfied with car dealers back then.

  • Norman Stansfield Norman Stansfield on Mar 09, 2021

    In other news, asteroids polled poorly with dinosaurs.

  • Jim Bonham Full EVs are not for everyone, they cannot meet all needs. Hybrids do a much better job of providing the benefits of EVs without most of the drawbacks. I have a hybrid sedan with plenty of room, plus all the bells and whistles. It has 360 hp, AWD, does 0-60 in just over 5 sec.(the instant torque is a real benefit), and I get 29 mpg, average. NOT driven lightly. I bought it used for $25k.Sure, it's a little heavier because of the battery, motor, etc., but not nearly as much as a full EV. The battery is smaller/lighter/cheaper and both the alternator and starter motor are eliminated since the motor assumes those functions. It's cool to watch the charge guage show I'm getting energy back when coasting and/or braking. It's even cooler to drive around part of the time on battery only. It really comes in handy in traffic since the engine turns off and you don't waste fuel idling. With the adaptive cruise control you just let the car slowly inch along by itself.I only wish it were a Plug-in Hybrid (PHEV). Then, I'd have A LOT more EV-only range, along with even more of that instant torque. The battery would be bigger, but still a fraction of the size of a full EV. I could easily go weeks without using much, if any gas (depending upon my commute) IF I plug it in every night. But I don't have to. The gas engine will charge the battery whenever it's needed.It's just not as efficient a way to do it.Electric companies offer special rates for both EVs and PHEVs which lower your operating cost compared to gasoline. They'll even give you a rebate to offset the cost of installing a home charger. You can still get federal (up to $7,500, plus some state) tax credits for PHEVs.What's not to like? My next daily driver will be a PHEV of some kind. Probably a performance-oriented one like the new Dodge Hornet or one of the German Hybrid SUVs. All the benefits, sound, feel, etc., of a gas vehicle along with some electric assist to improve fuel economy, performance, and drivability. None of the inherent EV issues of cost, range anxiety, long charging times, poor charger availability, grid capacity issues, etc. I think most people will eventually catch on to this and go PHEV instead of going full EV. Synthetic, carbon-neutral eFuels, hydrogen engines, and other things will also prevent full EVs from being 100% of the fleet, regardless of what the politicians say. PHEVs can be as "clean" (overall) as full EVs with the right fuels. They're also cheaper, and far more practical, for most people. They can do it all, EVs can't.
  • Ron rufo there is in WaSHINGTON STATE
  • ToolGuy @Chris, your photography rocks.
  • ToolGuy No War for Oli.If you have not ever held a piece of structural honeycomb (composite sandwich) in your own hands, try it.
  • ToolGuy You make them sound like criminals.
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