Being a Volvo dealer these past few years hasn’t exactly been easy.
“Our new car business has been a little soft without new models,” said Tom Ditzig, general manager of Rick Hendrick Imports and Volvo Cars of Charleston. “It’s not that we’ve been limited on product from Volvo. We’ve got inventory. It’s just the inventory has some age on it. Customers have seen our cars for a little while is probably the best way to put it.”
Lex Kerssemakers, president and CEO of Volvo Cars North America, hopes to change that.
Kerssemakers said he realizes Volvo’s brand has become stale, with some product designs a decade or more old. So, one of his first moves after taking over the top job in January was to announce a bold plan calling for 14 new Volvo designs to be rolled out over the next five years.
That includes new cars to be built at Volvo’s first North American manufacturing facility, which will start construction in Berkeley County later this year.
“Volvo is focusing on coming back, and how do you come back? With new products,” Kerssemakers said after a May 28 ceremony at Charles Towne Landing to announce the new factory.
“We need to re-engage ourselves, together with our dealers, on a product-driven journey,” Kerssemakers told The Post and Courier. “You can advertise what you want, you can do what you want, but if you don’t have the products supporting that journey, it won’t work.”
It’s an ambitious undertaking, but something Volvo absolutely must do to survive in the U.S., said journalist Robert Sorokanich, who covers the automobile industry for CarAndDriver.com.
“Volvo has been making cars in the luxury price range, but they don’t carry the same prestige as a Mercedes-Benz or a BMW,” Sorokanich said. “They need to make a product that competes with the German brands. They need to make cars that can justify the price that they’re selling them for.”
Kerssemakers said he understands that.
“We are going up north in respect to luxury,” he said, adding that many of the details are still being worked out. “We will cover that market with new entries, which I cannot talk about yet.”
Sorokanich said Volvo’s first attempt — the XC90 sport-utility vehicle — is a good start, particularly for jumpstarting the brand in the United States.
“The luxury SUV market is huge, so it’s a smart move for Volvo,” he said.
A mostly favorable review in Car and Driver magazine said the XC90 compares favorably with its German counterparts, but isn’t as ostentatious. Still, the jury is out on whether the SUV signals a turnaround in Volvo’s fortunes.
“The XC90 needs to be a success, not only for Volvo’s financial future, but also because it will set the tone for future ... spinoffs,” reviewer Alexander Stoklosa said in Car and Driver. “From what we can tell, it seems Volvo is on the right track. But much remains between this debut and final judgment.”
Until a few weeks ago, the XC90s on Ditzig’s lot were based on a design that was 13 years old — “ancient by car standards,” according to Sorokanich.
Ditzig’s dealership along Savannah Highway recently got its first newly designed XC90 demonstration model and already has taken more than a dozen orders for the vehicle. Another XC90 demo is scheduled to arrive in a week.
Next up will be the S90 — a large sedan that will become Volvo’s flagship model and is designed to compete with BMW’s 5 series and the Audi A6. That car should be at dealerships late this year or early next year.
“Outside of that, they’ve really been tight to the vest on what’s coming,” Ditzig said.
Kerssemakers hinted that Volvo will introduce a smaller, less pricey sedan — something along the lines of an Audi A3 or BMW 3 series — to the United States market. The automaker already sells a similar product in Europe.
“That sort of segment is ideal for expanding your portfolio,” he said.
Kerssemakers said it hasn’t been decided which vehicles will be made at the Berkeley County plant, but not all of them will stay in North America.
“We are still fine-tuning that,” he said. “Every car we produce is a global car, so there will be cars produced in the U.S. that will be exported.”
Along with the new models comes a new advertising campaign.
Volvo has partnered with Swedish DJ Avicii in its first global campaign “to change its image from predictable to progressive,” according to Marketing Week magazine. The campaign, titled “A New Beginning,” starts Monday worldwide.
“We’re going to go after a lot of younger people who probably don’t see Volvo as a brand with young appeal,” Alain Visser, senior vice president of sales, marketing and customer service at Volvo Car Group, told Marketing Week. “We want to become more relevant to that younger audience.”
Volvo hopes to boost U.S. sales to more than 100,000 vehicles per year after the Berkeley County plant starts producing cars in 2018. American sales have slumped in recent years — from 139,384 vehicles sold in 2004 to 56,366 vehicles sold last year.
Worldwide, sales are expected to hit 500,000 cars in 2015, up from a record 465,866 sales in 2014. The increase is largely due to the popularity of the XC90, Volvo officials say.
While Kerssemakers said Volvo pulled back its U.S.-bound production after the recession, Sorokanich said the automaker’s biggest problem during its recent lean years has been a lack of funding.
Founded in 1927 in Gothenburg, Sweden, Volvo — Latin for “I roll” — had been under Swedish ownership until Ford Motor Co. bought the brand in 1999. As Ford and other American car manufacturers faltered in the wake of the global financial meltdown, attention to Volvo was pushed to the side. Following a series of layoffs and setbacks, Ford in late 2009 sold Volvo to the Chinese-owned Geely Holding Group, parent to Chinese manufacturer Geely Automobile.
Volvo maintained its Swedish headquarters and management, and the automaker’s profits rebounded, increasing 17 percent to $271 million in 2014.
“Volvo has decent financial backing now, but they didn’t in the past and that hurt their ability to do the research and development work needed to stay competitive,” Sorokanich said.
Volvo’s Berkeley County campus should help the company’s finances because it will insulate the carmaker from fluctuations in U.S., European and Chinese currencies.
And while hardcore Volvo fans might grumble about the Chinese ownership, Sorokanich calls it “a sign of the times.”
“It keeps the company around,” he said. “The only other option for Volvo was to fade away.”
Kerssemakers bristles at the notion that Chinese ownership might compromise Volvo’s longstanding reputation for quality workmanship and safety.
“We have global quality standards,” Kerssemakers said. “All our manufacturing people are trained. We send Chinese people into Sweden and to Belgium to learn and to know how we are producing cars. So the quality level in any of our factories, irrespective of where they are, is exactly the same.”
Volvo plans to hire 2,000 workers for the Volvo campus in Berkeley County, with another 2,000 hires possible if demand for the American-made cars is strong. The state will provide worker training through its ReadySC education program handled through South Carolina’s technical college system. ReadySC officials will visit Volvo plants in Sweden and Belgium to develop a training program tailored to the automaker’s needs.
For Lars Wrebo, senior vice president of purchasing and manufacturing for Volvo Cars, the Berkeley County plant signifies a rebirth of Volvo in the U.S., a market the company first entered 60 years ago.
“Being in America makes a very clear statement that we are serious here,” Wrebo said. “We expect that our dealer network will invest in their facilities to support our growth.”
Ditzig said he expects Hendrick Automotive Group ultimately will expand its Volvo site in Charleston, which currently occupies a small corner of an import dealership dominated by BMWs. Volvo’s brand loyalty is high, Ditzig said, and the used car side of the lot has been steady. But he’s looking forward to marketing the new models and hoping for a boost in new-car sales.
“We’re going to be working very close with the manufacturer to figure out where and how they want our business placed,” he said. “It’s a combined relationship, the manufacturer and the dealer.”
Kerssemakers last month called Volvo “a long-term thinker in an industry that too often focuses too much on itself.”
He spoke of Volvo’s history and its “human-centric philosophy — everything we do is about people, a virtue that was instilled in us by our founders back in 1927.”
Kerssemakers said he’s determined to make his bold plan succeed. He says the brand deserves it.
“We are Volvo,” he said. “We stand for something.”
Reach David Wren at 937-5550 or on Twitter at @David_Wren_