Volvo Car: Client Mindset Spurs Brand Renovation

Q: What was Volvo Car México’s strategy to increase sales in 2018?

A: The new additions to our lineup had an important impact in that process. For instance, we introduced the XC40 SUV to the Mexican market, which became a huge success and helped us to attract younger customer segments interested in having a sizable and agile but minimalistic SUV. We also consolidated XC60 as a strong option within our lineup and transformed XC90 into one of our flagship products. Volvo Car’s solid vehicle offering has helped the brand retain and recover buyers and will help us continue to grow in the premium SUVs subsegment while introducing new vehicles to harness new opportunities.

Volvo plans to relaunch its S60 sedan in 2H19 to target the Mexican luxury sedan subsegment. We expect this vehicle to help us capture a significant share of this target segment. S60 is produced in the US and includes 15-20 percent of Mexico-made content and there is still a big opportunity to increase that content share. Volvo Group has a dedicated team in Mexico that is constantly evaluating local suppliers with the goal of adding more locally-produced content. Several OEMs have recognized the quality that the Mexican automotive industry can deliver.

Q: How will Volvo Car adapt its lineup to include more innovative technologies?

A: Electrification and self-driving technologies are at the core of our lineup strategy. By 2025, half of Volvo Car’s vehicles will be 100 percent electric and there will be several hybrid versions of our internal combustion models. We are engaging strongly in R&D to increase the autonomy of our batteries. Rather than an OEM that assembles and sells cars, Volvo Car wants to become a company that eases mobility to increase sustainability and safety.

Q: How is Volvo Car changing its lineup to reduce the price-per-kilometer of EVs in Mexico?

A: Battery packs represent a significant part of the cost of an EV. However, as OEMs like Volvo Car invest in the development of new battery technologies, the price of these critical components will fall, which will make EVs more affordable to consumers while also ensuring greater autonomy. The industry has already reached important milestones toward the development of new technologies for electrified vehicles but there is still room to reduce prices and boost sales.

Q: What is Volvo Car’s strategy to increase sales despite the ongoing sales downturn?

A: Each premium brand specializes in its own competitive advantage. In the case of Volvo Car, this means delivering the best possible customer experience. Volvo drivers are highly independent people that care for others and for the environment. They are involved in sustainability programs and are interested in consuming the products of companies that help the environment. We work hard to explain to our customers how Volvo Car’s philosophy is translated to its vehicles; they then become our own brand ambassadors and introduce potential leads.

We have been in Mexico for a while but our brand is transforming to continue growing. Volvo Car increased its sales significantly in 2018 and we expect to reach double-digit growth in 2019 thanks to a more complete lineup and a stronger and well-trained dealership network. The creation of a Volvo Car University in Mexico is part of our strategy to train our collaborators to introduce Volvo’s corporate culture and values to our customers in Mexico and keep them attracted to our vehicles.

Q: What opportunities exist for European investors to strengthen their position in the Mexican market while taking advantage of new trade conditions?

A: The world is increasingly connected, so doing business in several countries at the same time has become the rule. FTAs like USMCA are key bridges for this communication. Mexico’s vehicle market grew at wide and constant rates until recently and despite the loss of dynamism in recent years, the market remains healthy. In the case of the premium and luxury segment where Volvo participates, growth has been constant for a long time. However, this growth will have to stabilize soon.

Volvo Car is a Swedish manufacturer of premium light vehicles. By 2025, the company plans to reach aggregate sales of 1 million EVs and expects to generate half its revenue from fully electric models