Volvo Car Group just wrapped up the strongest sales month in its 88-year history, thanks in large part to the popularity of its latest XC90 SUV. The OEM is hoping to duplicate this success with the newly unveiled S90, which company President and Chief Executive Hakan Samuelsson believes should take it to annual sales of 800,000 units by the end of the decade.
Record 2015
Volvo’s November retail sales powered ahead 26% year-on-year to 49,055 cars, with growth in all key regions. As a company spokesman explained, “November (and Q4 in general) isn’t traditionally an especially strong period of sales for Volvo, as is the case with most car manufacturers. November 2015 was an excellent month, although there is no clear historical trend to significantly higher-than-average sales figures in previous years.”
So what was at work? Part of the momentum stems from the XC90. “The new XC90 is helping to get more customers into Volvo showrooms (some customers are new to the brand, too), and this is having a positive impact on sales – of both the XC90 itself and of the rest of the Volvo range,” the spokesman pointed out.
The model has proven pivotal to the brand’s revival in the US market. “We’ve seen a turnaround in the US,” Samuelsson told media at the S90 launch event on 2 December. Back in August he was admitting to analysts that “the US has been a problem area for us for years.” With November sales in the region soaring 90.5%, things are clearly taking a turn for the better.
“Volvo had languished for so long. The XC90 is its comeback vehicle and it’s coming back really strong,” Autotrader Senior Analyst Michelle Krebs told Automotive World. Since the model’s introduction it has been one of the biggest movers on the Autotrader website in terms of shopping interest. “It’s the right vehicle at the right time,” added Krebs.
The new XC90 is not only popular, it’s also profitable. The model saw a 40% rise in its average transaction price in the US in November. As Alec Gutierrez, Senior Analyst for Kelley Blue Book, pointed out, this model is bigger and more luxurious, offering more options. As with many significant redesigns, he explained, “the units first out of the gate in the first months tend to be highly optioned, with not a lot of discounting from the dealers. That’s what we’re seeing with the XC90.”
Another key factor in Volvo’s volumes was China, the brand’s largest market in November with sales of 8,045 units, up 15.8% despite the overall market slowdown. As Samuelsson observed, “In China the market has normalised. We’ve tackled the situation and last month brought a new car to market. You will see in the last month and in Q4 volume growth come back to China, and our volume growth will be faster than the market.”
Europe still accounts for more than half of Volvo’s sales and as Samuelsson pointed out, “It’s a very strong backbone. Volvo is now growing faster than the market and taking market share.” Its sales in Western Europe rose 17.1% in November, with retail volumes in its home market of Sweden up 41.8%.
Transformation milestone
For the full-year, Volvo expects global volumes to come in at 500,000 units, marking an all time high. By 2020, annual volumes are expected to reach 800,000 units. “Where will we be in 2020? We will be a company selling 800,000 cars with a substantial, sustainable improvement in profitability. We will be a true alternative to other premium manufacturers with our own distinct identity,” Samuelsson said.
To get there, it is counting on the S90 premium sedan. The model will make its official debut at the North American International Auto Show (NAIAS) in January, but journalists were treated to an unveiling ahead of time. Better known for its estates and SUVs, Volvo arrives in a new segment with the S90, which is based on the same Scalable Platform Architecture (SPA) as the XC90. Samuelsson heralded the model as “an important milestone in the transformation of the company, which started five years ago with the new ownership.”
As to be expected from any Volvo, safety takes top priority in the new sedan, which introduces a semi-autonomous drive feature called Pilot Assist. “Safety is the heritage of the Volvo brand. We’ll take it to another level with autonomous drive,” said Samuelsson. The system provides gentle steering adjustments to keep the car properly aligned within lane markings in certain situations. Power will come from a T8 Twin Engine plug-in hybrid powertrain, while the interior promises to be “one of the most luxuriously appointed” in the large sedan segment.
Even so, the S90 will have its work cut out for it, as interest in the large sedan segment wanes. The model it replaces, the S80, struggled to find a foothold during its time on the market. This time around, Volvo is patterning the S90 on the XC90 in terms of design direction and technology, and the strength of that model should provide a solid foundation for the new sedan.
Megan Lampinen
