Driving a vision of radical change

Volvo is a brand and business doing well in a challenging industry. Increasingly recognised as a premium brand, Volvo has enjoyed a fifth consecutive year of record sales and has won its first European Car of the Year award in 2018.  Purchased by Geely Holdings in 2010 Volvo sold 90,417 vehicles in China last year — more than in any other country, including Sweden.

Volvo management are clearly empowered to sharply focus on being a brand winner in a car market that is set for radical change. Volvo is setting the pace for electrification as the first major premium brand to commit to only hybrid or full-electric for new models launched in 2019.  By 2025 it wants one million Volvo electric cars in market and new vehicles made from at least 25% recycled plastics.  The Volvo venture capital arm is also investing in companies developing the wireless charging infrastructure needed for mass electric adoption.

This XC60 prototype features materials sourced from fishing nets, maritime ropes. plastic bottles, clothing offcuts and used car seats

Volvo’s actions and alliances show a business that sees an opportunity to shape a more sustainable, planet friendly and more connected mobility future.  So what are the potential changes and how is Volvo responding?

1. More consumers will deal with car brands directly and choose more frequently

The appeal of owning a car is declining as ride-sharing services such as Uber rapidly expand globally. The need to visit a dealership is also diminishing with virtual reality technology from start-ups such as Car360 enabling shoppers to “see” more of the vehicle they are considering and deal directly with car brands.

Volvo have embraced the trend with Care by Volvo, a subscription-based service that gives a customer a new Volvo XC40 for 24 months. Via a website or app buyers can build their car and personalise styling options directly with Volvo – with the scope to upgrade every 2 years, much like their mobile phone deal. The service has enjoyed early success meeting their first-year subscriptions target in just four months.

Uber has struck a deal to buy up to 24,000 self-driving cars from Volvo.

With the growth of ride-hailing services and arrival of driver-less cars we may ultimately end up with many consumers choosing a car brand on a daily basis. BMW and Daimler have joined forces for their own ride-hailing service. Tesla also intends to operate its own network of driverless vehicles.  Volvo, in contrast is aiming to be the go-to brand for mobility companies with big deals with Uber and Baidu for ‘robo-taxis’.

2.   Fewer cars owned but used much more often

The arrival of the autonomous electric car will coincide with increased utilisation. Elon Musk has repeatedly forecast that owners will offset the cost of ownership by making their car available to family and friends when they are not using it.

A future of owners sharing spare capacity explains Volvo’s Lynk & Co venture in China offering a car-sharing feature in selected car models. This direct to consumer service enables an owner to inform their network that their car is available for rent, and anyone with a Lynk smartphone app can then access and drive the car.

 The app enables owners to share their cars generating rental income to offset the cost of purchase. 

3. A move from driving experience to productive mobility

In 2018 Volvo shared a concept car design that offers a vision of future mobility in which car brands are competing primarily on the experience and productivity they combine with mobility. Designed for 24 hour use, the role of cars will expand – displacing short haul flights, for example.

screenshot 2019-01-22 at 17.16.05

In the journey to productive mobility Volvo are making some early enabling steps. Voice command features via Google Assistant and collaboration with Amazon to enable Amazon Key for in car delivery are examples.

4.  Cars will be part of a connected and efficient transport ecosystem

Volvo’s vision places personal travel within a connected, automated and electric transport system supported by technology enabled ‘smart cities’.  Volvo see the connecting of developments across automated, electric trucks, city buses, cars, construction equipment and marine transport as the means to efficient, reliable and congestion-free transportation in increasingly populated cities.

Articles supporting this article: Automotive News Europe, Forbes, Bloomberg, and Inc.

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