WORKING SWEDISH, GROWING MEXICANSat, 09/01/2018 - 12:17
Adapting products and services to the Mexican market can be a difficult challenge for foreign automotive companies looking to increase their market share. Despite the hurdles, the outcome warrants the effort, according to Torben Eckardt, Former Managing Director of Volvo Car México.
Sweden-based auto maker Volvo Car has gone down that road and after a difficult 2017 the brand is starting to harvest the results. However, Eckardt says the company must still overcome several challenges to implement the Volvo culture in Mexico and maintain the 18 percent growth rate it posted in 1Q18. “Our internal organization is changing, as well as the way we communicate and do marketing,” says Eckardt. “We need to work with the best partners, strengthen the brand’s image and reorganize ourselves internally to fit Volvo’s global corporate culture.”
Along with opening new offices in Santa Fe, part of Volvo’s changes to its team involved bringing in fresh blood with new ideas, perceptions, knowledge and networks, says Eckardt. He points out that collaborators who had been with the company for some time had the most difficulty dealing with the company’s changes. Those who succeeded are valued. “The people who stayed at Volvo Car México carry the brand's heritage, experience and knowledge,” he adds. Volvo’s goal is to be an organization wherein various viewpoints coexist rather than clash, says Eckardt. “This involves both modern leadership and modern employees,” he says. “Millennials cannot demand that leaders be modern and proactive if they are not modern and proactive themselves.” Change also reaches beyond Volvo’s walls. Eckardt says dealers and distributors must also be open to the changes that the company is implementing in the country. “Partners interested in making processes better, faster or stronger are attractive to Volvo,” he says. Differences in work cultures between Sweden and Mexico have been difficult and Volvo has worked to overcome this challenge.
Part of Volvo’s strategy is to create a different customer experience where dealerships, rather than being mere parking lots surrounded by glass, are spaces that recreate the atmosphere of a Swedish living-room. “We offer customers a homier experience by using imported furniture from Scandinavia and covering the dealerships’ glass façade to invite the clients in and see our vision of luxury for themselves,” he points out. Only in March 2018, Volvo Car México opened five new dealerships simultaneously in Guadalajara, Puebla, Monterrey, and two in Mexico City: on Masaryk Avenue and in the Santa Fe neighborhood. The Santa Fe location combines the Volvo showroom with its corporate offices and training centers. According to Eckardt, keeping a dealership close to Volvo’s offices enables the company to speed up processes. “This is a great form of integration as we can now go downstairs to learn the perspective of our salespeople,” he says.
As the final pillar in its renovation strategy, Volvo is also changing the way the company communicates its brand and how it markets its vehicles. Eckardt points to the launch of the XC40 as a turning point in the company’s history. “It was the first time for Volvo Car and for Mexico that a vehicle was launched simultaneously in all showrooms in the country,” he says. “The XC40 launch was both a turnaround for us as a brand and something new in marketing,” he says.Although these corporate changes are proving beneficial for the brand’s position in Mexico, their implementation has caused Volvo Car México’s growth to take slightly longer. Eckardt says the company’s sales were on the low side throughout 2017 because the company canceled its largest dealerships in Mexico City and Puebla. “These dealerships accounted for 23 percent of our sales,” he points out. “We expected to find a dealer to recover in the second half of the year but it took us longer to find the right partner.”
The company established a relationship with Grupo Picacho for its dealership on Masaryk and Volvo’s growth rate hit 58 percent in March 2018 and 18 percent for the entire first quarter of the year, compared to 1Q17. “This 18 percent growth in 1Q18 is close to the initial forecast we had of 15 percent growth for FY17,” Eckardt adds. “We are three to four months late in our projection but we hope to end 2018 with growth of at least 20 percent.” This task will now fall onto Raymundo Garza, who has replaced Eckardt as the new Managing Director of the brand in Mexico.