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Manufacturer insight: Volvo

> The full version of this interview appears on the Volvo profile at www.am-online.com/ami

AM: You came into this role in 2007 when relationships with your dealers were at a low point. What was that like as the ‘new boy’?

Kevin Meeks: You know it was quite good to come into a role where the only way you can possibly go is up. We were second from last in the National Franchised Dealer Association Dealer Attitude Survey.

If we came last that would have been a real disaster, but it gave us a very clear view as to why the network wasn’t feeling that Volvo was a valuable franchise to them.

And it was unsurprising, because not only was the network struggling to make any sort of profit, but also the way we were behaving towards the dealers was making it actively difficult for them to make a profit.

AM: Where do problems still exist in the network?

KM: It’s our marketing, product cycles, and pricing areas, but that last survey was taken (autumn 2011) before we relaunched our brand strategy so we’re hopeful in the next survey (March 2012) they will have started to see the results of that and actually even then I would expect them to be still a bit cynical about what’s going to come out of the new brand strategy, but by the end of the year and the coming years I would certainly be looking for that to start to pick up.

AM: What is the new brand strategy?

KM: We’ve had a nasty habit of launching a new approach to the brand, ‘More to life than a Volvo’, for example, and then abandoning it to launch something else.

There’s been very little consistency in that respect. Since Geely bought Volvo from Ford, we’ve looked at why we were putting ourselves in this position and understanding what it is that Volvo means.

That’s where things like the move of the brand upmarket, the idea of our cars being designed around you, has come from.

The way we shoot the cars in the adverts will reflect that, the idea of enhancing our Scandinavian design, the way we explain the luxury of our cars will all be improved.

All of our marketing for sales and aftersales will start to develop the same look and feel.

AM: Will this mean dealers having to spend lots of money on CI standards?

KM: No, not specifically. We’ve been through a process over the last few years of updating all the dealers’ internal branding with what we call ‘Volvo Next Stage’, but all our dealers are there now.

There’s more of a lesson in this for ourselves because we are looking at a process that we call ‘customer journey management’ which takes a view from the moment a customer sets foot in a dealer to the journey that they have around the dealership literally and in terms of the experience they have.

Although dealers have invested heavily in terms of all this internal branding, we sometimes undermine it by issuing tactical materials, pop up stands, pull out banners etc.

We don’t regulate particularly well how they get implemented in the dealer showrooms and consequently you can get these lovely warm showrooms with our stuff littering the place.

So we have implemented an internal review group that will look at all the marketing materials for sales, service, finance, that we implement and we will challenge ourselves to only implement what is necessary and to take out the things that have expired to make sure that when something is put into a dealership it is done in such a way that it enhances the brand experience and doesn’t get in the way of it.

AM: How many dealers have you got?

KM: 110. One up from last year. It’s been relatively stable over the last three or four years.

And there’s a total of another 23 authorised repairers, of which all but five or six are aligned with the sales dealership, so there’s only five or six genuine authorised stand-alone repairers.

Over the last couple of years a couple of our genuine authorised repairers have taken on the sales side.

AM: So is that stable with optimum coverage?

KM: We will only look to increase that when our volumes are increasing substantially. For example, if we get 60,000 cars we would still only need about 120 dealers.

Total Volvo registrations were 32,000 last year.

AM: That’s a huge leap to 60,000.

KM: There’s a huge wave of development within Volvo Car Corporation.

While we have long-term ambitions for our volume it’s not the most critical element of our intentions at the moment.

The most critical areas are the profitability, both for Volvo and the dealers; they go hand in hand.

Our network last year had a return on sale of 0.5% and 1% of total sales. Now, that is not acceptable but more concerning is that this it’s reflective of the national average.

Our dealers have an average turnover of about £10 million a year: a 1-2% return on sales would be £50,000. It doesn’t take many cars sitting in stock to turn that into a loss.



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