My years spent in the automotive industry (working in corporate PR for Mercedes-Benz and Porsche) taught me just enough about cars so that I know lots of trivia. For example, did you know that the 1995 Porsche 928S had an air-conditioned glove box? Men, apparently, love this kind of car talk.
And although I no longer pick up Motor Trend or European Car these days, I still have a soft spot for emerging trends in automotive sectors.
So when Chinese automaker Geely bought Volvo last year for the fire sale price of $1.8 billion from Ford, it was big news in the car biz because a decade earlier, the Michigan automaker had purchased Volvo for $6.5 billion.
Volvo had been in something of a holding pattern in many areas between 2007 when Ford first announced it was putting Volvo up for sale and 2010, when it finally closed on a sale.
Stefan Jacoby, who took over as CEO of Volvo last summer, told Advertising Age:
“You don’t look very good after you have been for sale for three years, but that’s going to change very fast.”
Jacoby was part of an effort at Volkswagen that had forced the global “Das Auto” theme on VW’s business around the world. A self-described “brand guy”, he put a deep-dive brand audit at the top of his To Do list.
“Unfortunately, I must have gotten 20,000 different opinions about what Volvo is, which told what the problem is.”
And his solution for Volvo, according to Ad Age, was to:
- emphasize its safety heritage
- bring more simplicity into its design
- push its positioning further into the luxury bracket
Trouble is, Volvo is not seen as true luxury in North America or even in its home market of Sweden. The brand is viewed as more “premium,” along the lines of what Buick has tried to stand for in North America.
Stefan Jacoby, however, insists that Volvo must stand for luxury globally, and he plans to push products, features and designs that can compete head to head with BMW and Mercedes-Benz without copying either one.
“We are going to embrace true Scandinavian design aesthetics when it comes to colors, materials and design, and our communications will reflect that as well.”
It may be too soon to see how the new marketing position is working for Geely and Volvo’s CEO Stefan Jacoby.
In 2010, Volvo’s passenger car sales rose by 29% in northern Europe and by 36% in China. But North American sales dropped 12% to under 60,000 vehicles, although it still remained Volvo’s top market. Volvo Construction Equipment, on the other hand, actually reported a sharp increase in sales and profitability last year for its heavy equipment vehicles amid improving conditions for the construction industry. Volvo CE increased its unit sales by a whopping 70% last year.
Can the passenger car whose brand image has been identified for decades as a solidly reliable, well-built, safe yet basically boring family sedan transform that image? Or will this very traditional persona help to push younger affluent consumers away?
Volvo’s trying. The company has decided to embrace social media to reach this elusive target demographic. But as Lexie Zi Liang evaluates their social media efforts so far in New Media Drivers License, Volvo still has a lot of work to do. For example:
- Facebook: “Volvo needs to listen more. The discussion board has several complaints but no Volvo replies. Compared to other auto brands, Volvo has a smaller fan base and fewer activities.”
- Twitter: “Frequency of tweets needs improvement.”
- YouTube: “Volvo’s YouTube Channel – interesting but not creative enough.”
- Flickr: “Unprofessional. Quality of photos is not satisfactory.”
- Blog: “Volvo’s official blog site needs design improvement.“
- Online Community: “Excellent, comprehensive and content-rich online community site – the highlight of Volvo’s social media performance.”
The task lying ahead for Volvo involves the perennial question: why do we buy the cars we do? Porsche, for example, used to train its dealers to appeal to the inner convictions of the typical (male, college educated, 35-55, Gucci/Rolex-wearing, air-conditioned glove box-loving, average annual household income of $400k+) North American Porsche owner, including these two important core beliefs their car represents:
- “I have arrived.”
- “My vehicle is an extension of who I am.”
Before Dr. Thomas Powers became a professor at The University of Alabama’s Graduate School of Management, he worked in marketing at the Ford Motor Company in Detroit. His years as an industry insider make him adept at analyzing the ways in which automakers try to influence our car-buying decisions. Considered an authority on the psychology of our obsession with the automobile, he knows the emotional buttons that manufacturers push to sell us on certain cars.
“When purchasing an automobile, a person must balance his or her psychological needs with often-conflicting practical needs. Automakers strive to appeal to the emotional motivations that trigger us to buy a particular brand or product category. That typically is done with ads that tie the auto to romantic, upscale surroundings, or to scenes of adventure and excitement, or to any other psychological cue that might resonate with their target markets.”
“People buy vehicles for a whole variety of reasons. Buying decisions are complex, and no one – including the automotive industry – fully understands how it works.
“It involves a number of psychological factors having to do with the individual’s personality and past experiences – as well as some pretty down-to-earth considerations such as disposable income and practical needs in a vehicle. To complicate matters, the purchase of an auto is often a buying decision that involves other family members.”
My own car-buying decision? It’s the micro-compact tridion steel roll-cage-with-seats two-person urban car called the Smart – ironically, made by my old bosses over at Mercedes-Benz. Does this automotive choice tell the world something about me, as marketers believe? According to Forbes, in their feature called What Your Car Says About You, Smart buyers are like this:
“You walk to your own beat and shun the conventional. You may be a first-time car buyer, urban commuter or a CEO who owns two or three cars. And you most likely don’t like to be judged based on your age or income, but defined by your attitude and lifestyle.”
Volvo a Chinese-owned company now? China is hardly known for its safety reputation. Let’s hope Volvo’s current management is not taking direction from its Chinese owners.
Will Volvo convince the younger demographic that this car is not their parent’s safe old boring sedan? Hard to tell, but I’m betting against it. Look at how Oldsmobile’s “Not Your Dad’s Oldsmobile” ad campaign crashed and burned…. Thx for this.
The new 2011 Volvo S60 despite its $50k pricetag has a soft plastic dashboard which does not spell l-u-x-u-r-y to me. They still have a long way to go to convince me.
Dr. Powers actually teaches at the University of Alabama at Birmingham, not at the University of Alabama in Tuscaloosa.
Hi Mark – I hadn’t specified either Birmingham or Tuscaloosa in this post. Thanks for clarifying, though.
The Chinese couldn’t do a worse job than Ford did between 2007 and 2010. The number of repairs and replacements on a car purchased brand new (and at a luxury price) speak to the lack of workmanship, pride, customer service and care at Volvo Corporation. My experience has shocked me. This is a brand I had nothing but respect for prior to actually owning a Volvo. It was a life-changing decision in the most negative of ways. See my open letter to Volvo.
Hi Alex – your story (and letter to Volvo) are incredible. Good luck with going public on this very bad example of appalling customer service. Have you considered going straight to the media?
Thanks for the reply Carolyn. I have thought about going to media and that will be my next step. However, the power of word of mouth is equally effective.