Volvo Growth Strategy: Tony Nicolosi, new President and CEO of Volvo Cars of North America says 90% of the senior management of VCNA is new since he took over in October 2013. Volvo’s marketing strategy is also going to change with the arrival in January of Bodil Eriksson as executive vice president of marketing and new advertising agency Grey London starting in March. Nicolosi says Volvo will return to its roots emphasizing safety, the environment and the family. The marketing budget for 2014 is bigger by about 50% but its emphasis will shift away from television to digital messaging.
Prior to becoming head of VCNA, Nicolosi was head of Volvo Finance in the USA, so he is very familiar with the leasing game. About 42% of Volvos are leased, well short of the leasing penetration of Audi, BMW or Mercedes. Going forward, Volvo’s lease penetration should increase with more concentration on more car for the payment and regular replacement. This will give Volvo dealers the first shot at putting off-lease customers into a new Volvo.
Once in a while, there is an opportunity to drive the same vehicle in England as in the USA. I recently had the opportunity to drive a Volvo XC90 Sport with V8 in England
. My daily driver happens to be a Volvo XC90 Volvo Ocean Race V8
. So with the exception of some cosmetic tweaks and right hand drive, the English example was about as close to my Volvo in the USA as it could be. While you couldn’t lose the brilliant red XC90 in the parking lot, its “colour” did not seem to garner much respect from other cars on the road. But driving the XC90 for ten days in England certainly does bring home the differences in the driving environment.
Right Size in USA – Titanic in Britain
In the USA, the Volvo XC90 is surely a Luxury Crossover Sport Utility Vehicle, but in Britain it is a Chelsea tractor open to sneers and ridicule by the hoi polloi
. In some places, there are restrictions on driving vehicles like this in the city center. In the USA, the XC90 is the right size. In Britain, it is huge having to hug the shoulder of the road to let a Daewoo Matiz micro mini squeeze by. How many times did I feel like I was going mirror-to-mirror with approaching traffic? Many!
Having a discussion with an elderly gentleman in Henley, he said to count the number of 4x4s driven by women. As in the USA, the proportion of female drivers was as high or higher than males. As in the USA, these vehicles have become the suburban transportation for children. Safe, secure, somewhat ostentatious, thirsty and open to ridicule. But the XC90 is just the right size to swallow a ton of luggage and transport you safely though any type of terrain or weather.
Fill-ups Stop the Heart
One thing I was terrified of was filling the XC90 V8 with petrol. The first fill-up was over $140 – double what it costs in the USA. Luckily I was using regular and not premium. The second fill-up was slightly less. Let’s do the calculations…
There are 3.8 liters to the gallon so this fill-up was 55.99 litres or 14.7 gallons – it seemed like a lot more. Petrol was 120.9 pence per litre or £1.209 per litre. So, this particular fill-up was £67.70. Now, sometimes I pay that much in dollars, but in pounds it is a dramatically different situation. The dollar is $1.991 to each £1.00 British Pound. So this fill-up was $134.79. Now you understand why Europeans drive dramatically smaller cars than we do.
Pricing in Britain – Twice as Much as in USA!!!!!!!!
Not only do the British pay much more for petrol than Americans do for gasoline (mostly due to taxes), but they pay a whopping premium for the cars they drive. Take the XC90 for example. IIn the USA, the base price of the XC90 is $36,950. In Britain it is £32,845 (I’m not doing a feature by feature comparison – just base to base). So, that is $65,394. The Volvo XC90 Sport is $50,615 in the USA and the top of the line Executive model is £54,550 in Britain – $108,609. I don’t know about you, but thinking of paying more than $100,000 for a Volvo blows my mind. Now, probably I’m over estimating something here – like VAT – is it in or out of the British price? Don’t know. But even taking out a VAT amount, their prices still are a hugely stiff premium over USA prices.
Gillian Strikes Again
Every navigation system voice requires a name. This one is “Gillian”. One of the first things I do in Britain is to set the navigation system to exclude all motorways – limited access highways like interstates. I like to lump along on scenic byways rather than on a high speed highway. Over the years I have been experiencing ever improving direction capability and the Volvo navigation system was no exception. It never put the XC90 on a motorway. It kept the directions on A-Roads and B-Roads for the most part, but occasionally a road without number would pop up. Invariably, this road would be little more than a cowpath. It would have one lane roads through picturesque villages or include a toll-bridge (even though NO TOLL ROADS was programmed into the system). By day seven, I learned to ignore all directions that lacked a number like A36 or B3094. Those were safe and navigable, but without a number, all bets were off. This is a lesson to be heeded even here in the good ol’ USA.
Such a Deal! Last July, I leased a Volvo XC90 Volvo Ocean Race Edition (Number 71 of 800). Reacting to a radio ad saying come on down to your local Volvo dealer you can get a Volvo XC90 V8 for $389 a month for 24 months with $3,000 cap cost reduction. How could you pass up a $54,000 SUV for that monthly payment?
Remember, I make my leasing decisions on horsepower per lease dollar so the AWD XC90 with 311-horsepower pencilled out pretty well. In fact, the dealer dropped the monthly payment to $370 without me even asking. But that’s another story.
Frankly, price was the thing that brought me to the XC90. It had not been high on my list of SUVs to consider, but it has turned out to be great vehicle – not without flaws however.
What makes the XC90 great? Its size is just about optimum. Not too big. Not too small. Compared to the four Ford Expeditions in row I had driven previously, the Volvo is the right size. From the driver’s seat forward and side visibility is excellent. The seats are very comfortable and the color combo was outstanding.
This XC90 is the Volvo Ocean Race Edition in a bright blue with a light tan interior. Very distinctive – not a vehicle you’d lose in a parking lot.
So, what are the nitpicks?
Tire Relationship to Wheel Lips.
Have you ever looked closely at an XC90 from the side. It looks like a stork sitting on spindly little wheels and tires with a huge gap between the top of the tire and the wheel lip. Why? Well, Volvo design specs require snow chain clearance. Understandable in Sweden, but I’m willing to forgo that spec for Southern California.
As the pendulum swings towards smaller vehicles and ‘socially conscious’ consumers Volvo has decided to shrink some of their XC90s. Volvo will expand their Crossover SUV lineup to compete in the arena with vehicles like the Lexus RX350, BMW X3, Toyota RAV4, Honda CRV and Mercury Mariner (Ford Escape/Mazda Tribute). Some may ask… Does Volvo need another soft roader 5-passenger SUV positioned under its 7-passenger XC90? Is Volvo concluding like many manufacturers that multiple SUVs are required to compete in today’s auto market?
XC60 Violates Volvo’s Naming Strategy
Codenamed Y278, then dubbed XC50, the production version will be called the XC60. This name violates Volvo’s own naming strategy. That strategy, that they have been implementing over the past few years, has each hatchback, wagon or SUV having an odd-number – C30, V50, V70, XC70, XC90. The sedans are all “S” names with even numbers – S40, S60, S80. So, here comes the XC60 and throws all this hard work out the window. Wonder why?
IIHS released the results of its 2007 Safety Pick Awards on November 20. VehicleVoice and AutoPacific feel that these results are important to communicate to our readers. Along with other awards for quality, satisfaction and performance, safety awards can and should be among the information sources a buyer uses when deciding which new vehicle to buy. After all, the Internet gives us almost perfect information.
While we do appreciate the safety value of electronic stability control, it will take years for the entire fleet to be equipped with ESC. For IIHS to eliminate all vehicles lacking ESC eliminates many otherwise safe vehicles from their analysis. This is too simplistic an approach.
2007 TOP SAFETY PICK award winners: award criteria are tougher; SUVs eligible for first time
The Insurance Institute for Highway Safety announces 13 vehicles that earn TOP SAFETY PICK awards for 2007. Winners include 4 cars, 7 SUVs, and 2 minivans. This award recognizes vehicles that do the best job of protecting people in front, side, and rear crashes based on ratings in Institute tests. Winners also have to be equipped with electronic stability control (ESC).
Audi A6 manufactured in Dec. 2006 and later
Subaru Legacy equipped with optional electronic stability control
Mercedes M class
Subaru B9 Tribeca
Subaru Forester equipped with optional electronic stability control
Since we have identified the vehicles that have the longest days supply, we have been asked to show which vehicles have the shortest days supply. Which vehicles are so hot they just blow off the dealer’s lot? As with the slower moving vehicles where we arbitrarily cut off the days supply at 150 days, here we are using 50 days as the cut off point. The details are shown “below the fold”
New York Show is Backdrop for Reveal
Volvo‘s current XC90 was introduced for the 2003 model year, and is due for a bit of a refresh. As the U.S. accounts for about 50 percent of all XC90s sold, it is no surprise that the minor change for 2007 model year was introduced at the 2006 New York auto show. Brought to you by AutoPacific and VehicleVoice, below is a first review of the changes, complete with before and after photos.
Among the most significant aspects of the update, which include some new safety features as well, is an all-new 232HP 3.2L in-line six-cylinder engine to slot between the 208HP 2.5L turbocharged I5 and the 315HP V8. The new six launches in the S80, though quickly followed by installation in the XC90, and is mated to a six-speed automatic transmission. The new engine will figure prominently in Volvo’s range over the next several years.
Worldwide Introduction Set for Geneva
The aging Volvo S80 gets a major update for the 2007MY, and Volvo has released some initial data ahead of its auto show introductions in Geneva (March) and New York (April). Sales in the States don’t begin until the end of 2006. Though AutoPacific and VehicleVoice correspondents won’t have the opportunity to get our hands on the updated S80 for several months, we do have some first impressions to share.
The original S80 established the modern Volvo design motif that has evolved through the lineup from S80 down to the upcoming C30. Elegant and expressive, the Volvo cues have given the cars an at-a-glance identity. The new S80 is clearly a Volvo, but may be too close in execution to its smaller stablemate the S60. Volvos are known as practical, safe, family cars and to the extent they vary from that formula, Volvo risks abandoning its heritage… an all to common occurance these days.
Handsome as the new S80 is, the very fast windshield, fast backlite and swoopy roofline promise more restricted interior roominess and headroom. While very tastefully done, we can’t help but wonder if a more practical execution wouldn’t be better accepted. Of course, the sales of the original S80 have stagnated towards nothingness, so any refresh probably will generate improved sales.
Believe it or not, one of the most anticipated new vehicles introduced at the 2006 North American Auto Show in Detroit is the 2007 Hyundai Santa Fe mid-size SUV. VehicleVoice (http://www.vehiclevoice.com) and AutoPacific (http://www.autopacific.com) are watching this introduction very, very closely because it will demonstrate the strength of Hyundai’s research and development process and ability to produce quality products at its new assembly plant in Alabama.
This it the second generation Santa Fe. The first Santa Fe surprised pundits when it turned out to be a darn good vehicle and actually won four of the five AutoPacific Vehicle Satisfaction Awards during its five years in production. The Santa Fe turned out to be a good value, good quality, highly warranted, if quirkily styled sport utlity vehicle what out-pointed products like the Ford Escape and Toyota Highlander in owner satisfaction.
Hyundai has high expectations for the new Santa Fe and hopes to fill half of its Montgomery, Alabama plant with Santa Fe volume. The other half of the capacity is devoted to the new Sonata sedan. Assuming quality is top-notch and Hyundai can maintain its value proposition and strong warranty coverage, the Santa Fe promises to be a winner.
The Hyundai press release for the Santa Fe is shown below.
We at VehicleVoice (http://www.vehiclevoice.com) and the VehicleVoice Blog-o-Rama (http:/.vehiclevoice.com) often feel that we are fighting an uphill battle concerning the use of the word “Crossovers”. This is a term that has come to mean SUVs based on car platforms and mechanicals. That’s fine. However, it is industry jargon that has not been adopted by the public. The media, picking up on industry jargon is forcing the term where no-one needs it.
An SUV is an SUV or Its NOT
Based on our research, it’s simple. American vehicle buyers have categorized vehicles into several basic categories: cars and trucks further subdivided into luxury cars, mid-size cars, economy/compact cars, sports/sporty cars, pickup trucks, sport utility vehicles (SUVs) and vans/minivans.
The SUV category seems to be giving folks the most trouble. To a typical vehicle-buyer, an SUV is an SUV is an SUV. There are big ones and small ones, but an SUV is an SUV. Muddying the playing field, however, is the notion of a “crossover”. A Traditional SUV in this more complicated world is a truck-based SUV like Ford Explorer or Toyota Sequoia. A crossover SUV is an SUV based on a car platform, a “unit-body” platform. But people often forget that the Jeep Grand Cherokee, Jeep Liberty, Mitsubishi Montero are all based on unit-body platforms but are not car-based. Does this make them a crossover? NO!
Chevrolet Trailblazer… a “real” Truck-Based SUV
Post-Modern SUV… Soft Roader… NOT Crossover
So, it’s pretty muddy. What crossovers need to be are at-a-glance SUVs. The basics of the SUV equation are well known so deviating is a risk. An SUV must have a basic two box bodystyle, relatively tall glass for good visibility, a relatively upright windshield that provides a stiff A-Pillar allowing easy ingress/egress, and a command seating position. At the same time interior roominess and the ability to carry cargo is very important. From our perspective, this most American of vehicle types is very easy to understand but easy for a foreign car company to get wrong.
Pontiac Torrent… Car-Based Post-Modern (Crossover) SUV
Let’s read on about how USA Today recently reacted to the issue of “crossovers”…