Volvo's Scandinavian Soul Search

March 16, 2011

Since its acquisition by Geely one year ago, it would appear that Volvo is experiencing a bit of an identity crisis. Conflicting statements from top executives have presented an opaque image of future development and called into question strategies for expansion. At the core of the debate is Volvo's identity.

With its current products priced out of the mainstream but lacking the cachet of top tier brands, Volvo treads in muddy waters in terms of consumer perception. Compounding the issue, most automakers now rival Volvo's safety repertoire, long its distinguishing characteristic. Approached from any angle, the market challenges are complicated.

Initially, Geely's Li Shufu told the Financial Times that he felt Volvo needed a BMW 7-Series or Mercedes-Benz S-Class rival to go head-to-head with the Germans. Competing with the top guns could do wonders for brand equity and perch Volvo atop the same mantle as Audi, BMW and Mercedes. An ambitious and risky undertaking for sure, but finally free from Ford's grasp, why not shoot for the stars? 

Not so fast, said Volvo CEO Stefon Jacoby, telling Autocar that Shufu's vision was "a step too early." Adding, Volvo first needed to achieve sale volume before venturing into uncharted territory. Fair enough, get the cards in order, make some money and then unleash the heavy artillery, right? 

Well, not quite. Later, Jacoby seemed to have a change of heart, telling Autocar, "Let's ditch this talk about premium. We need to focus on elegant Scandinavian simplicity, our own unique identity, and not copy our competitors." Essentially an about-face to Shufu's earlier comments, Jacoby's remarks propagate more questions than answers about Volvo's market positioning and how that will translate into future sales. 

In 2010 Volvo sold 373,525 cars worldwide, which the company aims to more than double to 800,000 by 2020. With pressure from Geely to get a return on its $1.8 billion investment, it will be interesting to see where the road ultimately leads as Volvo reinvents its image.


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