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[NEWS] Analysis: Why Volvo EVs are online only

Analysis: Why Volvo EVs are online only

93 volvo c40 recharge 2021 official images static nose

Commercial boss Lex Kerssemakers explains the logic behind its new sales model

Volvo’s commitment to becoming a maker of only electric cars by 2030 isn’t the sole way in which the Swedish firm is changing: it has also vowed to reinvent the way it sells cars.

The only way to buy an electric Volvo, such as the new XC40 Recharge P8 and the forthcoming C40 Recharge, will be online. The company has already launched its no-commitment Care by Volvo subscription scheme and is now introducing fixed pricing for cash buyers. Every car will be sold with a ‘care package’ that includes items such as servicing costs and warranty.

It’s a fundamental shift in how the car industry operates and one that raises several questions, over everything from value for money to the future role of dealerships. Autocar recently spoke to Volvo’s commercial boss, Lex Kerssemakers, about the move.

Why is Volvo making the shift to online sales now?

“The world is ready for it: consumers are asking for this change. We have some experience now of online sales with Care by Volvo, including in the UK. In Germany, 10% of our sales are already online.

“During Covid-19, that has only increased, and not only in the automotive environment: just look at all those delivery vans going down your street. Everyone is ordering online.

“We thought ‘now we’re entering a new era of electric cars, let’s build on what we’ve done with Care by Volvo and start with online only’.”

Why start selling online with just your EV range?

“[The XC40 EV] is a new car and probably [will attract] some new customers. With Care by Volvo online, 90% of customers we hadn’t seen before. Whether it was the online aspect, the subscription process or a combination of the two that made them come to us, they hadn’t seriously considered Volvo before. We have a new car and an online system now, so it’s a new era.”

Do you think EVs will attract very different customers?

“It’s too early to say. We definitely see the plug-in hybrids have a slightly different audience, and they’re potentially a little bit younger, despite the fact the cars are relatively expensive.”

What have you learned with Care by Volvo that you can apply to online sales?

“Peace of mind. That’s why we’ve introduced the care package we offer on subscription for cash sales. It’s pretty normal on [car] subscription, but to have it on cash sales is new.

“It’s still a hurdle for many people to go electric: what does it do? How does it work? Is it reliable? We want to create a hassle-free buying experience online, so let’s take away any resistance: three years’ warranty, maintenance and repairs. Everything is included – except fuel. You can sit on your sofa and take care of everything. The only thing you need to decide is if you want to pick it up at the dealer or have it delivered.”

So you think the care package will help convince people to shift to EVs?

“Yes. If the manufacturer will pay for everything if it goes wrong, people will be prepared to take the risk. You think ‘well, they’re not stupid, so probably nothing will happen or they wouldn’t include it’. It’s this confidence we want to create.”

How does this work with dealers? Will this affect your relationship with them?

“No. [The relationship is] very strong in the UK. In the automotive industry, you see a few very strong digital companies popping up that offer cars online in a very professional way. Dealers notice this too, and they’ve been asking us to help with a strong online system.

“Online doesn’t mean we exclude our retailers. Half of our sales are most likely online by 2025, so half will still happen at the dealership. Not everyone just sits on the sofa and orders a car. People still want to go to the showroom, and there they can sit with the dealer and order through our website. This is a flawless online-offline experience, and the dealer plays a major role in it.”

So it’s about the dealer accepting that the shift to online sales will happen?

“I know what it costs, this whole online hocus-pocus. If every dealer had to do it on their own merits, it would be almost impossible. Our task is to provide a strong system with the dealers connected. We’ve involved the dealers from the start. We talked to them and explained it. Sometimes there’s a fear that if you go online, there’s no role for dealers; this is totally the opposite.”

What about set pricing? Won’t people worry they’re not getting a good deal?

“People increasingly feel discomfort with negotiations, with the constant feeling of ‘did I get the right price?’ Nobody wants to have that feeling; you want to feel secure. So we’re going to have a set price, and a competitive price; it needs to be competitive or it won’t sell. That’s the one price and the dealer sticks to it, which is easy because it’s online. We know from research that people don’t like negotiating: it’s a very small audience that likes to go and shop around – guys like me! But most people just want to order online and feel comfortable.”

Is that a lesson from your fixed-price subscription?

“Absolutely. And that’s why we’ve worked so hard to translate the whole sale into a digital system: we looked at how you order a TV, how you order food. You do that with very few clicks; it’s friendly. So we had to simplify our product offering. If you want to have 25 different options, you keep on clicking and then this option doesn’t go with that option and you’re lost after 25 minutes.

“So we’ll pick a few very popular cars based on artificial-intelligence data and see how it goes. If a car doesn’t fly, we’ll put another online. We’ll have three or four cars in different price categories and go for it.”


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