Are rising interest rates affecting vehicle sales and financing?
Most consumers are paying buyers. As interest rates go up, so do car payments.
OEMs have to be aggressive with sales incentives and APR subsidies, increasing the supply of days. But I don’t think you should wait. Pursue conquest, chase consumers. Be proactive rather than passive.
Former Volvo Cars CEO Hakan Samuelsson predicts a “new normal” of lower volumes and higher margins will emerge from the industry’s current supply crisis. Is it good for brands and their retailers?
Due to COVID and supply chain challenges, we have found that keeping inventory at 45 days worth of inventory can result in higher margins. That way you don’t have to desperately try to get rid of the car to keep the floor plan costs down. A balance of volumes is required to be able to profitably grow market share.number of days last year was too low and had a negative effect.
Is Volvo’s plan to go all-electric worldwide by 2030 realistic?
The plan is evolving. Under CEO Jim Rowan, new leadership says PHEVs (plug-in hybrids) need to be considered more than originally planned. Hakan has been 100 percent BEV all along. But we need more balance.
It is up to the consumer to decide whether to switch to BEV. When did the supply side decide what the demand side would do? Here’s the message from the dealer network to Volvo: Listen to your consumers. If you have guests, let’s go together.
Two barriers to adoption still exist. Inadequate charging infrastructure and range concerns. We won’t be fully electric until the infrastructure is ready and we can charge the car in less than 10 minutes. Today, EVs have a range of 250-400 miles. Late last year I drove 385 miles to eastern Tennessee. Due to range and charging infrastructure issues, I would not have taken his BEV on that trip.
What does Volvo’s focus on EVs mean for dealer margins and fixed-operation businesses?
The concern is maintaining dealer profitability with a BEV-only lineup.
Since EVs have few moving parts, they are less likely to break. So how do you pick up the slack in your fixed operations business that has been lost? What other channels are there to generate new revenue and reduce costs?
BEV R&D costs are high, and dealers are said to have to give up some of the profits to share. However, as the Retail Advisory Board, Our job is to secure the network on margin conversations. Dealers have invested in building facilities and EV infrastructure. We have supported electrification strategies. Any discussion of margins with the dealer network should be a win-win conversation.
Automakers are looking to unlock features through subscriptions and post-sales over-the-air updates. How will that trend affect dealer revenues and profits?
Very positive if we are included. If not, very negative. It has to be a win-win. Dealers are required to compensate for missed revenue opportunities as if the feature or features were in the car when it arrived at the dealer or was installed..
Some automakers, including Volvo, are experimenting with central stock models. But are Americans prepared to wait weeks for their cars?
US consumers have a see now, buy now mentality. Why Amazon Prime? Because it will reach you sooner. People want to sit in their car, feel it, drive it, buy it on the spot. I don’t see it changing.
We see the central inventory model evolve to meet consumer needs while reducing distribution complexity and costs.
Rowan expects EVs to reach price parity with internal combustion engine vehicles by 2025. is that realistic?
It is my understanding that the cost of R&D and technology like Lidar for electric vehicles is much higher than for internal combustion engine vehicles. We hope to reach price parity by 2025.
What does the Controlled Inflation Act and its eligibility rules mean for the introduction of EVs in the United States?
Everything coming out of Congress is complicated and requires a decoder ring to make sense of the new law.Volvo is pressing Congress to clarify what the law means for automakers To do so, we reached out to dealers using local associations and NADA.
Why is the flagship EX90 electric crossover important to Volvo in the US?
We certainly see it as a potential mass production vehicle. As the market moves towards the more friendly BEV market, we are poised to succeed with this vehicle.
The United States is the largest market for that car. I’ve been getting calls from dealers all over the country and people putting their car deposits left and right. In his first 24 hours after the vehicle was unveiled, some dealers received as many as 48 reservations for him.
The EX90 represents the direction we are heading as a brand. It doubles Volvo’s safety DNA and offers rider technology as standard equipment. Riders will be as essential to automotive safety in this century as seat belts were in the last century.
The new model also retains the DNA of the Volvo XC90. The design is familiar and easy for customers to accept. If Volvo changes its design too much, it risks alienating consumers.
What makes the EX90 the right vehicle for this market?
The EX90 is designed and manufactured for the USA. This seven-seater of his is marketed as a family-friendly carrier, with popular features such as a captain’s chair. I’m really looking forward to it.
Are there any concerns that EX90 deliveries won’t start for over a year?
For dealers, the sooner it hits the market, the better. I hope to get the car soon, but I want to make sure this car is the right one. It has to be a home run for us.
Last fall, Volvo hinted at an electric crossover that would fit underneath the compact XC40 crossover. Does the US market need such a car?
Smaller crossovers fit nicely into our lineup. Lower prices will help you reach customers you don’t currently sell to, such as urban buyers, young couples, and nurses wanting a BEV.
The wider our product offering, the more advantageous it is for our dealers. We want to connect people to the brand early on and, over time, upgrade to other models in the lineup as their income increases and their mobility needs change.
What is missing from the Volvo line-up?
Suburban or Tahoe sized SUV for large families. The consumer demand for that vehicle is there. Volvo has hinted at his XC100 SUV, but is silent on it. Compact or mid-sized pickups force you to think outside the box. The demand for electric pickups is crazy. We are not in that market and would love to try it.