Hard Times, Hard Lessons for Volvo

For the second time this year, Volvo has announced mass lay-offs to the tune of 6,000 employees worldwide. This news follows a staggering sales drop for September-the By the Numbers sales report shows an ulcer inducing 51.8% sales drop from the year before. Noted, all manufacturers posted sales losses, but Volvo’s loss was second only to Hummer. 

So, what happened here? Famous for making boxy, safe and sturdy sedans and wagons, Volvo enjoyed a fiercely loyal group of buyers. For the enthusiast, Volvo started offering turbocharged versions of its cars in 1981. With the 1993 introduction of the front-wheel drive 850, Volvo started moving away slightly from its boxy design style in an effort to lure buyers from Saab, Mercedes, Audi and BMW. This move angered many hard-core Volvo fans, but did pay off in sales increases. In 1998, Volvo released the XC70 Cross Country-a V70 wagon with a turbocharged engine, all-wheel drive, a macho look, and increased ride height. The car was a success, and in 1999, Ford Motor Company purchased Volvo. 

Ford sensed a winner in the Cross Country. You had the commanding view and all-wheel drive capability without the stigma of SUV ownership-essentially a more polished, upscale Subaru Outback. Even so, Volvo had no answer for the BMW X5 or Mercedes ML-series SUV’s. In 2002, Volvo introduced the XC90, its first SUV, which would become the Volvo’s best-selling vehicle in the US. 

Gas was still relatively inexpensive, and times were great for Volvo. Enjoying the success of the XC70 and XC90, Ford directed its resources, and saw its sales potential in these lines. Meanwhile, Volvo’s passenger cars soldiered on and on, largely untouched. Historically, that is not unusual for Volvo. But in an environment where Audi, Mercedes, and BMW are constantly trying to one-up each other, sitting on the sidelines will not get you anywhere.

Case in point is the S60, Volvo’s mid-range sedan. This car has been with us since 2000, essentially unchanged save for a minor revision in 2005. A new S60 is coming, but not until sometime in mid-’09. The press and the buying public lost interest in this car years ago. Volvo also offers the S40 sedan and V50 wagon-these are generally good, capable cars, but Volvo does nothing to market or promote them. And they are no where near as interesting as the comparable Audi A3. At the top sits the S80, but as a flagship sedan the car is a bore. The safety features available are at the cutting edge, but in this class, you need more than that to succeed, and it is here the S80 falls short of its direct competition.

The most interesting car Volvo has brought to our shores in some time is the C30. A small, premium 3-door hatchback, its closest competitor here is the Mini Cooper. 

The rear-end styling is reminiscent of the classic Volvo P1800ES of the early 1970’s. While aimed at the youth market, Volvo seems to be at a loss at how to lure them into the showroom. Mini has some of the slickest marketing going, and if the C30 were to even hope to have a fair chance, Volvo had to step up big-time. Instead, Volvo hardly promotes the car at all. Worse, with a sales force standing in showrooms accustomed to selling XC90’s Cross Country’s, and what Volvo die-hards still come in out of sheer brand loyalty, you have to wonder if they were equipped to deal with the youth market Volvo was hoping for. 

The C30 is not a bad car-if you want a comfortable, competent small car, and you find the Mini a little too extroverted for you, the C30 is your car. It’s just a shame almost no one knows about it. 

Greed drives the auto industry. Everyone is guilty of it. It is why all automakers chose the high-profit margins of their SUV’s, and kept that money, instead of investing it in their passenger cars. Volvo is no different. But what is tragic is that Volvo has for you, right now, the C30, S40, and V50 models-smaller, yet still practical cars that encapsulate the spirit of what most consider Volvo to be-safe, and sturdy, but with features important to everyone now-good fuel economy, and reasonable pricing. In light of this, it is positively stupefying that Volvo is not shouting from the rooftops that they have these cars sitting on their lots.

But no, Volvo is not promoting those cars. Instead, they are focusing their efforts on the upcoming XC60 crossover, to be positioned under the XC90. Wrong car, wrong time, Volvo.

Tagged as: layoffs, recession, volvo