Burt: Volvo Starving Under Ford



Can Volvo succeed while Ford Motor Company is faltering?

Ford sources say there has been much transcontinental in-fighting about the Volvo brand, and its direction from both a product standpoint and marketing. There is a new CEO at Volvo, Frederick Arp, who replaced long-time chief Hans-Olov Olsson, who recently retired. Arp is feeling pressure, as is everyone at Ford these days, to deliver solid operating profits. But sales have been slowing in the key U.S. market.


For all Volvo’s brand advantages in the marketplace, it has long struggled with its identity, stuck a bit between “premium” and “luxury.” And while it enjoys the highest opinion ratings for safety, few consumers put safety at the top of their list of buying considerations.


“Volvo is a great brand with extraordinary clarity for one thing, but that one thing isn’t a lot of people’s cup of tea,” says marketing consultant Dennis Keene.


And despite its strong brand equity, the brand has been plagued by two things — not enough product and a nickel-and-dime ad budget.


Ad changes coming


Ford is about to put that nickel-and-dime budget up for review. Executives on Thursday confirmed a report in Advertising Age that the Swedish car brand will have a review for its global account with the idea of choosing a new advertising agency and developing a global brand strategy.


One of the facts about all this is that Volvo Cars North America last year spent a mere $71 million in measured media in the U.S. last year, and about $150 million globally. BMW spends about $150 million in the U.S. alone. The brand posted sales of 107,000 through November, down six percent from a year ago despite the fact that premium brands have been climbing.


Volvo’s North American ad agency, Havas Euro RSCG, has been doing very solid work this past year. The current campaign, themed, “Who Would You Give a Volvo To?” is spot on, as is the brand slogan — “For Life.” Volvo’s brand equity is in safety and security. Indeed, automotive consultancy Strategic Vision says more people in its surveys associate the word “trust” with Volvo than any other automotive brand — more than 60 percent. No other brand scores above 50 percent in that survey.


But there’s no certainty that changing agencies will mean increased budgets, as Volvo seems to need.


The fix is in?


At a time when Ford is struggling to make something out of the Lincoln brand, the Mercury brand, the Jaguar brand and to some degree the Ford brand, Volvo is a brand that doesn’t need fixing. It just needs a coherent product strategy and a decent marketing budget. The brand is just fine.


The shortage of product at Volvo is changing. It now has ten models. Volvo is just launching a new S80 sedan and C30. The C30 is a new entry for Volvo in the premium small-car segment. But the brand doesn’t look or behave like a division with ten models. The S60 and S80 aren't the same car but look like they are. The V70 and XC70 are derivatives of the same wagon. And in any case, it doesn’t spend enough to market all those nameplates.


The brand’s breakthrough in the U.S. was the introduction of the XC90 SUV, which has been widely rewarded with praise by the auto press. Making less of an impression, though, have been models such as S40, V50, and the C70 coupe. The sporty C30, coming next year, will have difficulty gaining traction as well without proper marketing support.


Volvo has carried Ford’s Premier Auto Group for several years as the PAG unit has racked up huge losses from Jaguar. And Land Rover has only recently turned an operating profit. Ford doesn’t have to do much to fix Volvo except invest in some clever and consistent marketing.


Perhaps a global review of the marketing will yield some ideas. But it had also better yield some additional funding for a brand that deserves to be fed.


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