Last Friday, Volvo senior vice president Alain Visser stepped off a plane at Auckland Airport and headed to Greenlane to open the doors to a new showroom set to house the Swedish brand’s range of vehicles.
Stepping inside the wide-open space of the showroom, the Scandinavian heritage of the company is alluded to by minimalist design, bright white paint and subtle wood finishings.
“You can’t sell a diamond ring in a candy shop,” says Visser in explaining why the company has decided to invest in the flash new establishment.
The diamond Visser refers to in this statement is the XC90, which will be released in New Zealand in July.
“Our next three cars are the XC90, the S90 and V90, and they’re all being released within the next 12 to 18 months,” says the Belgian born executive. “These are three very premium cars, which need premium premises.”
But is this investment worthwhile for a brand that only sold 421 vehicles over the course of 2014 in New Zealand?
“We currently have a plan to grow from half a million cars to 800,000, which means we have to grow everywhere … And even though New Zealand is a small market, we currently sell between three and four hundred cars, and we believe that in New Zealand we should be able to sell 1,000 cars in the foreseeable future.”
Visser doesn’t see such extensive growth happening in 2015, but is challenging the Kiwi Volvo sales team to achieve this within the next four to five years.
"Across the globe, we are going to increase our marketing budget. And particularly now as we’re starting to launch more products, we need to release more marketing funds to make sure that we get awareness in the marketplace."
But unfortunately, this increase in spend does not mean that Volvo will be releasing any advertisements specific to the Kiwi market in the near future (the above stats are based on rate card value and sourced from Nielsen).
"When you work with a volume of four or five hundred cars, and measure that against the cost of a good commercial then I think it’s very difficult to justify."
In an age when bricks-and-mortar retail is increasingly being challenged by online buying, it does seem somewhat counterintuitive for brands to be investing in flashy showrooms—and Visser concedes that there is some truth to this.
“The time of investing in palaces is over,” he says.
“We see that about 80 and 85 percent of customers shop online, so the shopping doesn’t happen at dealerships anymore. It happens online. I call it the phenomenon of moving from tyre kicking to tyre clicking. This is a fact that’s happening, yet I don’t believe—and maybe I’m old-fashioned—the car distribution system will move away from dealers. A car is still the second most important purchase you make in life after a house and obviously cars need to be delivered and serviced somewhere.”
This shift to online buying is already being reflected in the sales of the XC90, which hasn’t even reached the showrooms to date.
“As of this morning [Friday], we sold over 20,000 XC90s across the world … [and] customers haven’t seen the car yet.”
Volvo set a target of selling 50,000 across the world, and Visser says to sell 40 percent of that before the launch well exceeds the company’s expectations.
“The XC90 is getting noticed, so the Germans are saying, ‘Oh shit, we need to take these Swedes seriously,’ says Visser.
The XC90 ushers in something of a new era of Volvo, not only because it’s a more premium vehicle but also because of its design.
“The XC90 is symbolic and strategically important for two reasons: one, it’s a true statement that we will be premium, and secondly it’s the first true Volvo. And by that I mean it’s the first car not built on the Ford heritage. It’s our architecture, our engines and our own design. It’s really our first car—and, all other cars that follow this will be built on that architecture.”
In becoming more premium, Volvo steps closer to a zone occupied by the German automotive juggernauts of BMW, Audi and Mercedes Benz, but Visser stresses that Volvo does not see itself in the same category.
“We are really trying to be ourselves. We don’t compare ourselves to BMW, Mercedes or Audi. We play our own game. We are interested in what these guys do, but less than what you probably think. They are good at what they do, and we’re not saying that they’re wrong and we’re right. But we do something else.”
This emphasis on being unique has been most evident in Volvo’s truck advertising, which has seen cameos from Jean Claude van Damme, hamsters and ballerinas as part of its ‘Live Tests’ campaign.
Visser says that Volvo’s advertising approach has evolved in recent years do to the uniformity in the communications strategies employed across the industry.
“Marketing in the car industry is the most boring and the least evolutionary of any industry. Let’s face it, all car manufacturers spend 60, 70, 80 percent on advertising, then the rest on motor shows, sponsoring, and that’s it. It’s really insane. Everybody does the same.”
To counter this, Visser now advises his teams to purposely avoid running with the pack.
“I’ve now told my team that we can do the same as everybody else, but slightly less because we have less money. And I call that the ‘spray and pray’ strategy.
So I’ve basically told my team that if everyone else does it, then it probably should be a reason for us not to do it. Before it was, ‘Let’s do it because everyone else is doing it.’”
Further to this strategy, Volvo is currently pulling its marketing from car shows because there isn’t enough value in them for the brand.
“You have 50 brands surrounding you all renting X square metres and trying to tell their stories,” says Visser. “Why would I go to Frankfurt where the German brands have four times the space and are basically showing us that they are a lot bigger than us?”
He says that the money previously spent on such motor shows is now being shifted across to Volvo specific events, which will see press coverage attributed only to brand.
“At Frankfurt, they write about all 50 brands. We might see our media presence peaking, but as a percentage of total press coverage it doesn’t peak at all.”
Visser says that the press usually takes quite a positive approach when covering Volvo, because it’s still seen as a challenger brand, sticking it to the bigger companies.
“I think the press likes us because we do it in our own way: small and in the sideline,” he says.
And while this might be the case for now, Volvo has some ambitious growth objectives and should they be reflected in actual sales, then the adjective ‘small’ will potentially be dissociated from the brand. However, in the meantime, Visser, a man who seemingly doesn’t suffer from jetlag, is continuing his international road show, going from Auckland to Sweden to Spain to Brazil and then to Shanghai to spread the good word about a brand that he believes does things a bit differently.