Volvo's upmarket plans hindered by brand image, poor CO2 emissions

Posted Mon Nov 24 2008 6:39 AM by Viknesh Vijayenthiran

Volvo’s sales are up more than 10% in emerging markets such as Russia

Volvo's plans to move upmarket have been known for some time now, but the carmaker's new European boss Stuart Kerr has said that a couple of important factors are holding back the brand from reaching its full potential - including, believe it or not, that its older cars are too reliable. Kerr, who previously ran Volvo's UK operations, has admitted that in today's current economic climate Volvo is struggling to carve out a niche for itself in major markets. Part of this problem may be attributed to the fact that Volvo's brand image is still associated with the Volvo's of old, which were safe, reliable and boring, and the fact that many of them are still on the road is hindering the public from seeing the new Volvo.

While it may seem strange for a brand manager to be regretful of the reliability of his company's product, Kerr stated that it is "very difficult when you are trying to build a brand image today" when people only "think of the boxy cars we had in the past."

Kerr's statements may have some truth, especially when examining the Russian market, which was never exposed to the older-generation Volvos. Without the image of 'old Volvo' hindering 'new Volvo', the Russian market is booming for the Swedish brand, with sales up 10% and in greater numbers than BMW, Audi and Mercedes, reports Automotive News.

Kerr highlighted the issue of Volvo's environmental performance, acknowledging that the brand must improve its CO2 emissions if it wishes to be successful. "CO2 has been something of a weak spot for us," Kerr said. However, if Volvo can bring in new emissions reducing technology then it may be able to reach its sales goal of 200,000 units in Europe once the current economic crisis subsides.

Ford, which still owns Volvo, no longer sells any vehicles in the premium segment apart from its Lincoln brand now that Jaguar and Land Rover are sold. In response, management hope to reposition Volvo as a global premium carmaker.

Volvo’s strategy is to roll-out several new models and advanced fuel-saving technologies such as stop-start and brake-energy regeneration. There are also plans for the introduction of petrol-electric hybrid models, including a possible plug-in hybrid.

The carmaker is also conducting a review of its products with the outcome likely to be fewer models. There is also the possibility of North American production of some models, however this is a low priority at the moment.

Reader Comments

Mon Jul 7 2008 10:29 AM
Gabara says

Acura & Volvo trying to move upmarket in a time when the luxury market is on the decline ... interesting to see what happens.
Tue Jul 8 2008 7:25 AM
Jim says

I know a number of Volvo owners and if the brand goes up market I would see most of them seeking a different brand if they perceive that Volvo has become a luxury car. This reeks of brand suicide.
Mon Nov 24 2008 10:46 AM
SuperSkyline89 says

I wouldn't say that it's a "too reliable" problem. More like the fact that they're not perceived as true luxury, the way that BMW, Mercedes-Benz, Audi, and Lexus are. I'd say that Volvo is more of on the same level as Acura and Infiniti. They're still technically luxury makers, just affordable lower market ones.

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