Despite a sales slip of 15,000 vehicles in North America last year, Volvo senior vice president, sales and marketing Gerry Keaney refuses to be drawn into the country’s price war.
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“The incentives war in the US has reached such a level that we took a decision that we were not going to get into position where we could not compete profitably,” he said.
“Once you are involved then how do you get yourself out of the situation? The current price will ultimately damage consumer confidence and residual values.”
The drop in the US accounted for a 12,000 fall in Volvo sales worldwide in 2005 to 444,000 vehicles – but it will remain an important market particularly for the new C70 coupe convertible currently being launched.
North America will be the top market for the vehicle accounting for 50% of the 20,000 production capacity at Uddevalla plant in Sweden, a joint venture with Italian design and engineering house Pininfarina.
The C70 marks the Italian company’s first venture outside its home country and replaces the previous ill-fated JV between Volvo and TWR of the UK.
“We learned a lot from the previous JV,” said Keaney. “It’s no secret that we had a difficult relationship with TWR and for this one to work well we wanted a partner which was successful in its own right and would be involved completely in the development and production of the vehicle.”
The C70 is an important car for Volvo, despite the small production numbers, because of the ‘halo’ effect it has on the brand.
Keaney added: “It is fresh and innovative. We still have to attract new customers and the C70 is one of tools we need to do this. We have already pre-sold 1,200 in the US and the only occasion we have achieved that in the past is with XC90.”
The two other major markets for the new model will be the UK and Germany while Keaney said overall he was pleased with the company’s sales globally.
“We maintained our market share in Europe while we were significantly up in China, South Africa and Russia, three places I see huge potential for further growth in the future.”
“India is another country with potential although we do not have a sales operation there yet but it is something we are looking at. With the growth opportunities in China it would make sense to look to some sort of production capacity there in the future.”
Chris Wright
