Volvo will launch online car sales, skip some major auto shows

Volvo will launch online car sales, skip some major auto shows

Volvo Cars said it will start selling vehicles online as it rolls out new models to compete with German luxury rivals BMW, Audi and Mercedes-Benz. The Swedish carmaker, controlled by China’s Geely, will gradually introduce web sales and spend more on digital advertising, the company said today as it outlined changes to its global marketing strategy.

“The plan is to have all our car lines in all our markets offered digitally,” Volvo sales chief Alain Visser said in an interview.

“We know from research that more and more of our customers are ready to buy online,” Visser said. “The reason why they are willing to buy is not to get a cheaper price, but to avoid the hassle around negotiating the deal.”

Few manufacturers have tried selling directly online. A notable exception is Tesla, whose electric car sales have cut out traditional dealers, leading to conflict and effective exclusion from parts of the United States.

But Volvo has assured its 2,000 global dealerships, half of which are in Europe, that it has no such plans.

“If you say the word e-commerce, initially dealers get nervous,” Visser said. “We don’t see a car distribution network without dealers in the foreseeable future,” he said, adding that vehicles sold online “will still pass through the dealer network” for delivery.

Volvo raised its 2014 sales goal in August as it launched a revamped XC90 crossover, the first vehicle developed under Zhejiang Geely Holding Group ownership.

With its flagship SUV and other models to follow, Volvo is ratcheting up the gadgetry and glitz to woo Chinese customers without losing sight of core attributes including safety and uncluttered Scandinavian design.

Volvo said it would not follow rivals into city-center boutique dealerships of the kind increasingly used by BMW, Mercedes-Benz and Audi. “We’re a different brand with limited financial means,” Visser said. “We don’t believe in building these big palaces.”

Some 80 percent of Volvo customers already shop online for other goods, the sales chief added, and research suggests many will do the same for cars in future.

But some analysts such as Stuart Pearson of Exane BNP Paribas remain skeptical, citing weak orders from experimental online sales of the BMW’s i8 hybrid sports car. “BMW has tried it in Germany, but they really haven’t had a huge amount of volume,” Pearson said. “People still want to go into dealers.”

Volvo is also shifting its focus from auto shows to market more directly to buyers. Starting next year, the company will take part in just one motor show per region: Geneva in Europe, Shanghai or Beijing in China and Detroit in the U.S.

“We have been doing what is expected in the car industry so far, and we’re going to do things that are unexpected,” Visser said. The carmaker needs to “stand out and challenge things,” just as its products will, he said.

Volvo’s decision to leave some key auto shows, including Frankfurt and Paris, contrasts with the desire of German competitors BMW, Audi and Mercedes to show off. Interest in such shiny and sometimes extravagant affairs is especially high in emerging markets, where car ownership is soaring.

Audi attends all the major international shows including Paris, Geneva and Shanghai. At the last two industry events in Frankfurt, Audi constructed temporary free-standing exhibition halls to display its latest models and seek to one-up rivals. In 2011, that meant spending more than 10 million euros ($12 million) on an indoor test track.

“When we go there, we try to be the best,” said Luca de Meo, Audi’s sales chief. “We see them as very important platforms,” he said, especially in growth markets like China, where car shows are proliferating.

Volvo’s Visser said: “Let’s be honest about it: We’re still a relatively small player. We have an 800,000 volume forecast by 2020, which means that our budgets compared to our some of our competitors are still going to be relatively small.”

Volvo will probably sell about 465,000 vehicles in total this year, Visser said. By comparison, BMW is set to deliver more than 2 million autos this year, a record, after handing 1.9 million over to customers from January to November. Audi sold 1.59 million cars over the same period, also setting a record. Daimler delivered 1.49 million Mercedes-branded vehicles.