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September 08, 2020 02:38 PM

Volvo expands retail arm in push to double online sales

Douglas A. Bolduc
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    Volvo aims to increase online sales from less then 25% of its global volume now to 50% by 2025.

    Volvo Cars is edging deeper into the retail space with the aim of creating an industry benchmark for seamless movement between online and offline channels.

    One key goal of the move is to more than double global online sales to 50 percent by 2025, while also making it easier for customers to sign up for a Volvo subscription and service their cars.

    "We are planning is to really leverage the potential of digital to build a really strong distribution system with offline and online components," Volvo's sales boss for Europe, Middle East and Africa, Bjorn Annwall, told Automotive News Europe. "We need to work together with our retail partners to make that happen."

    Volvo CEO Hakan Samuelsson is a big proponent of online sales, which he credits with helping accelerate the automaker's post-lockdown rebound.

    "We would not have had 14 percent growth [in July's global vehicle sales] had we not been helped by online sales," he told ANE in a separate interview.

    Hassle-free experience

    Volvo believes the move will satisfy growing demand from customers who want a "modern, hassle-free retail experience when buying or servicing their car."

    To do this the Swedish automaker announced merger and acquisition plans on Monday for two dealerships in its home market.

    The aim is acquire Stockholm-based Upplands Motor and take full control of multibrand dealer Bra Bil, in which Volvo already has a 50 percent stake. Both businesses will be merged with Volvo Bil (Bil is Swedish for car), a company-owned operation responsible for big fleet accounts including all company cars at Volvo Cars and truckmaker Volvo AB.

    With the additions to Volvo Bil, the automaker said it will pilot a "technology-led transformation" of its retail operations in Sweden, where is has a 19.3 percent market share.

    "We will use this combined dealer group as a trailblazer to develop great ways in which digital and physical distribution can work together," said Annwall, who joined Volvo in 2015 from consultancy McKinsey & Co. and was promoted to the automaker's top-level executive management team a year later. "We will work with our retail partners to make that come alive."

    Volvo, however, has no plans to expand further into the automotive retail space either in Sweden or elsewhere.

    "In Europe we have 750 retail partners. After this, we will have 749," Annwall said. "Those are the partners that we want to empower to have a profitable future."

    Upplands Motor has more than 800 employees selling the Volvo, Ford, Renault, Dacia and Mercedes-Benz brands. Annwall said that the company's Ford and Mercedes operations are not included in the deal. Renault and Dacia are included.

    "The majority of Volvo retailers in Sweden are also Renault dealers. So, it's more natural than it sounds to work together because we have a longstanding relationship," he said.

    Upplands Motor was founded in 1964 in Uppsala, Sweden, and today has facilities in Arlandastad, Tierp, Hammarby Sjostad and Kista, where the head office is located, according to the company's website. In 2019, the company delivered 3,183 cars, up from 2,831 in 2018. Of that total 2,008 were new and 1,175 used, up from 1,861 and 970, respectively, in 2018, according to the retailer's financial report.

    Bra Bil has locations in Gothenburg, Landvetter, Upplands Vasby, Kungsangen, Vallentuna, Enkoping, Balsta and Bro. The company sells more than 3,000 new cars and 2,600 used cars annually, according to its website.

    "In Europe we have 750 retail partners. After this, we will have 749," Volvo EMEA sales boss Bjorn Annwall said.

    Care by Volvo

    The Care by Volvo subscription program was Volvo's first foray into building a direct, virtual retail link with customers, while still relying on dealers for delivery and service, when the automaker launched the program three years ago.

    In key markets such as Germany, Care by Volvo accounts for more than 5 percent of the automaker's total registrations. The aim for 2020 is to boost that number to between 10 percent and 15 percent. Another impressive figure for Care by Volvo in Germany is that it has a conquest rate from other brands of more than 90 percent.

    Annwall said automaker's investment in Care by Volvo has been a crucial part building up the company's understanding of building an online relationship with customers.

    "Not only did it give us more comfort in the online arena, it also gave us full confirmation that the online arena cannot live by itself," Annwall said. "It needs to be complemented by the physical arena. When you get those two to work together, you get magic, both for the consumers and for your business."

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