Volvo Aims To Sell Cars Like Tesla, Yet Include Dealerships

January 13, 2015

Would you buy a car via your computer, tablet, or smartphone?

Volvo thinks that many Americans would. And it’s pushing ahead to prepare a new system that would allow online sales.

It’s close enough to beg comparisons to Tesla Motors’ controversial sales method, which has been challenged in nearly every state and remains banned in more than 20 states. But it’s different enough in that it would keep the dealership network in the loop in all respects—with a yet unannounced system that would assure showrooms some revenue from the sale.

“Unlike some of our competitors, we don’t think that this is an alternative to the dealer channel, but that it’s complementary to the dealer channel," said Volvo's global sales and marketing chief, Alain Visser, in an interview at the press preview for the Detroit Auto Show. "And it’s something that we are working on with our dealers.”

“We want to be clear, we don’t see at any point in time a distribution network without our dealers,” emphasized Visser. “We believe the actual ordering of the cars can happen with a click; but the delivery of the car, the full service for the car, will always be at the dealership level.

Already beta-testing it with XC90

It’s something Volvo has already been testing. This past year it hosted an early online-only sale of its 2016 XC90 First Edition cars—in a limited edition of 1,927 units—that we only sold online to end buyers, not dealerships.

“Honestly, when we launched that idea, a lot of people even within the company said...this is not going to happen; people don’t buy a car at that price level without having seen it,’” quipped Visser. “And the fact that it was sold in two days caught us quite by surprise.”

2016 Volvo XC90 First Edition

2016 Volvo XC90 First Edition

Visser said that the special-edition sale taught Volvo some lessons about how it might apply such a system in the future. For instance, it gave people 50 minutes to complete their purchase forms.

“We realized too many people were experimenting with building cars, and playing around rather than buying, holding purchase positions, and so the people who really wanted to buy, it was frustrating—so we need to shorten that time,” he said.

First for online sales: Scandinavia, perhaps China

Volvo targets the U.S. as a key market for the method, but the plan is several years away and it will try smaller markets first. Sweden and Norway will see early implementation. Norway also, coincidentally, has proven to be a very strong market for Tesla.

“We’re also looking at China,” said Visser, where dealership networks aren’t as defined.

Coincidentally, the automaker has just announced that it's sourcing the U.S.-market Volvo S60 Inscription sedan from its Chengdu, China, assembly plant.

Meanwhile by 2018 Volvo plans to double its U.S. sales and aims for global annual sales of 100,000 by 2018.

“We have to be very honest: The patient has been sick for a very long time, and we have been losing volume for eleven years.”

Products are the priority first though

Volvo has about 300 dealerships now and, Visser said, many of those dealerships remember the years earlier the last decade when the brand sold 140,000 cars annually. “So getting back past 100,000 is very important.”

Those new sales methods come after a push of new products, and a strengthened brand image.

“But it’s not just spending more; we’ve lost something in brand differentiation, and some other brands have started to own what we claim as our DNA,” said Visser. “So we need to claim that back.”

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