Chinese ownership driving Volvo toward increased production, sales

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The Volvo logo.

Under Chinese ownership, Volvo is set to begin an advertising blitz to drive sales. (Public Domain/Hautala/Wikipedia)

Volvo is now under new Chinese ownership, but that doesn’t mean that the automaker isn’t fully focused on developing a game plan for big returns in the U.S. Automotive News reports that Volvo will increase television advertising in expectation of a new vehicle sales year at least 25 percent more potent than in 2011. Incentive spending will be marginalized, and Volvo dealers are excited about the year to come.

US sales to exceed 65,000 units

Volvo Cars U.S. CEO John Maloney noted that Volvo can more than afford to up the ante with its TV advertising. Sales were on the rise in the second half of 2011, leading to 53,948 units being sold in the U.S. Maloney predicts that Volvo’s U.S. sales will run “north of 65,000” units, a significant increase over the previous year. Analysts predict that light vehicle sales will be up industry-wide in the U.S. in 2012 – but to 13.5 million units – and Volvo’s predicted increase of 10 percent will be notable, considering that no new vehicle models will be introduced, save for a refresh on the XC90 crossover in January.

Tight supply chain choked sales

Volvo is committed to avoiding the pitfalls that suppressed sales in 2011. Supplies of the XC60 mid-sized crossover and S60 sedan were tight throughout the year, notes Maloney. Despite this, however, sales of the S60 experienced significant gains last year, reaching 19,331 units by year’s end. By increasing production in Sweden, first-quarter supply should be more than sufficient to meet U.S. sales goals.

Volvo’s positive path for 2012

In addition to increased advertising and production, Volvo has renewed commitment to improvements across the spectrum. Dealership incentive spending is now less than $2,000 per vehicle, below the industry average of $2,500. Kantar Media notes that Volvo’s marketing spending will be way up, however. After spending $31 million in 2010, the total jumped to $42.5 million through September 2011. Total for 2012 will be even higher, according to Maloney.

Volvo dealerships satisfaction also made a great leap forward, jumping from 21st in 2010 to 14th in 2011, according to the most recent National Automobile Dealers Association dealer attitude survey. The vast majority of Volvo dealers are profitable.

Aiming at 2004 totals

Volvo still has a long way to go before it challenges its U.S. sales peak of 139,067 vehicles from 2004. Chip Ott, owner of Volvo of Fort Washington dealership in Pennsylvania, thinks the 100,000 barrier will fall, as early as this year.

“We need to sell 100,000 cars a year in the United States; throughput is the most important part of the business,” Ott said.

Volvo’s China business strategy

Sources

Automotive News

Edmunds Inside Line

Wall Street Journal

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