Foundations for growth
Volvo is looking set for a formative 12 months. The New Year marked the launch of its all-new D4 diesel engine, the first developed in-house since the brand parted ways with Ford in 2010, and by the end of 2014 the Swedish carmaker will have unveiled the next XC90 SUV, using a new lightweight, modular platform which will eventually underpin the rest of its large cars.
It’s the final piece of a range which has been entirely refreshed over the last two years. V40 arrived in 2012, completing a range across all key fleet sectors and helping lift Motability sales last year, while a facelift across the 60, 70 and 80 vehicles last summer has brought fresh style to showrooms.
All of which are good news for head of corporate sales, Selwyn Cooper, now charged with streamlining the part of the business which accounted for 68% of its UK sales during 2013.
‘If you’re a company car driver and you’ve never considered a Volvo, now is the time that you should re-evaluate us,’ he says. ‘I genuinely think that, but you’ve been able to say that for two or three years. You’ve got rational reasons, those intrinsic core value reasons we’ve always had, but now with the styling you’ve got the emotional reasons too.’
Forthcoming products will reduce the number of unique parts and bring more of its technology in-house. But in the short term, the new Drive-E D4 engine puts Volvo into contention with the German premium brands, bringing CO2 emissions for the V60 and S60 under 100g/km and with a limited efficiency penalty for the new eight-speed automatic.
Cooper expects the D4 to account for 40% of V60 and S60 sales, and not necessarily at the expense of other engine derivatives. A downward push on CO2 emissions is core to the brand’s growth plans in the UK, and Volvo is re-focusing its advertising message to get the benefits across to customers.
‘What’s going to portray business sales success for us is year-on-year growth, over the next 12 to 18 months, of something near 20%,’ Cooper says. ‘What will underpin that success is product; with V40 the portfolio of cars we’ve got today is the most attractive they’ve ever been. Couple that with the engines, and the BiK and whole-life cost benefits they give, and the rational element of the decision is easier than it’s ever been for a business user – we’ve got the right products at the right time.’
Cooper is also confident about the future of the V60 Plug-in Hybrid. The diesel-electric estate is already on sale in the UK, but volumes have been limited as the carmaker prioritises the Netherlands, where tax incentives have made it a particularly attractive buy. Since these were withdrawn at the start of 2014, larger volumes will start to come to the UK.
‘Rather than limited supply that we’ve had, from next model year will have the supply which means we’ll be actively selling that product across a broader range of clients, and a broader range of acceptability. We’re in the stages of ordering a demo fleet for the new model year to get into the mainstream,’ he explains.
All of the Drive-E engines are electromobility-ready, and the XC90 Plug-in Hybrid arriving in the next generation car is seen as having even broader appeal than the V60. ‘I have three electric cars into a chauffeur business – they’ve been doing some evaluation of them for their fleet. The issue they have is they’re restricted to single driver occupancy, because of low carrying capacity. It’s a smaller car then they usually have, but they will take XC90 Plug-in hybrids when they come,’ Cooper says.
New products are only part of the equation. Volvo’s network of 16 business centres will expand to around 30 – final numbers are unconfirmed. To date, two thirds of the network has been focused on large businesses, backed by a full in-house department. With a third of Volvo’s UK business sales going to SMEs, new appointments will have a specialist on board seeking relationships with local businesses rather than larger leasing company business.
Internally, Cooper is performing a similar refresh of the recently retitled business sales department, which will double the investment in the diverse sector: ‘We think it’s a more intuitive term,’ he explains. ‘Business sales over the last three to five years have become more sophisticated, as people have opted out of company cars, we’ve got an ever-increasing in growth personal contract hire to complement private contract hire and we’re getting the emergence of salary sacrifice programmes. These are all business products, but they’re not necessarily fleet products.’
Existing teams of account development and business development managers will be combined as the sales development team, albeit still managing their large and small business respectively, while a new strategic partnership manager will look after areas such as public sector and Motability. A new TCO manager was appointed last year, and Cooper is appointing a support centre as a central point of contact for customers.
With product and process set to change dramatically, Cooper is feeling bullish about the brand’s near future in fleet: ‘It’s about resourcing our growth now, based on that opportunity we see through an increasingly relevant portfolio of business products,’ he says. ‘It’s not just blind growth – it’s based on our confidence that the products are relevant to the business community.’