Volvo Automobiles has a message for skeptical buyers because it seeks to rebound from a inventory market hammering and stunted revenue margins: “Security is our superpower.”
The family-oriented, safety-obsessed Swedish carmaker, has gained enormous market share with younger households over its practically 100-year historical past because of its low harm charges in collisions.
By some accounts, its flagship XC90 SUV, launched in 2002, has by no means had a single driver or passenger fatality reported within the U.Okay.
Vovlo Automobiles, although, is at an inflection level as the worldwide automotive trade struggles with slowing demand for electrical automobiles. With its share worth slumping at a document low and doubts rising over its long-term technique, the automaker is taking a really cathartic method to advertising and marketing its distinctive promoting level: security.
Volvo is a “premium” model, in different phrases, a carmaker that has a product clients are keen to pay a premium to acquire. Apart from its rising tech capabilities, that premium is security in Volvo’s case.
“You’ve got your first baby, you come residence from the hospital, and also you begin interested by security in a way more visceral method,” Volvo CEO Jim Rowan advised an viewers throughout a Q&A at Volvo’s CMD.
“Security is our superpower.”
Volvo has at all times mentioned that it believes clients place a premium on security. When requested by Fortune how Volvo differentiates itself from Polestar, the struggling EV model with shut ties to Volvo by their shared majority shareholder Geely, Rowan doubled down on that distinction.
Whereas Polestar’s USP lies in its slogan “Pure progressive efficiency,” Volvo’s lies in “security, sustainability, human-centric design, and family-oriented clients,” Rowan advised Fortune.
Volvo is combating a flat EV market. A number of elements, together with falling shopper sentiment, the pullback of Authorities subsidies, and rising international tariffs, have helped push the carmaker’s inventory all the way down to a document low because it first floated publicly in 2021.
On Thursday, Volvo mentioned it might shift its key goal to rising market share within the premium class moderately than growing income. Additionally it is ditching a pledge to solely promote electrical automobiles from 2030, extending its sale of hybrids into the following decade. In a flat market, the carmaker says, one of the best ways to develop is by taking clients from different manufacturers.
To seize market share, Volvo is hammering residence its security proposition.
As a part of its 90/90 presentation on Wednesday, the place it unveiled its new hybrid XC90 and its electrical EX90, Volvo confirmed an extremely dramatic advert detailing a pair having their first baby, leaping forward by the daughter’s childhood.
In direction of the tip of the advert, we lower to the soon-to-be mom strolling throughout the street when a careless Volvo driver practically runs her down. Nonetheless, she is halted by the automotive’s sensor, which spots an individual on the street. Volvo says within the advert that typically the moments that don’t occur are crucial of all.
Volvo’s security premium
Volvo’s security ambitions are getting a lift with synthetic intelligence.
Volvo’s chief of engineering and expertise officer, Anders Bell, described how 50 years in the past, the carmaker can be on the scene of accidents with measuring tapes, assessing skidmarks and different crash indicators that may higher inform Volvo’s designs. The group additionally launched behaviorists to higher perceive how people acted within the build-up to accidents.
“Now we’re going to equip that course of with this superpower,” Bell mentioned of using generative AI in its automobiles, “which is real-time, real-world perception, which is able to considerably shorten our path to conclusions.”
On Thursday, Volkswagen mentioned it was extending its partnership with Nvidia, utilizing a core computing chip in collaboration with one of many world’s largest corporations.
The group’s tech partnerships, which additionally embody Google, Qualcomm, and Luminance, will give drivers extra indicators to enhance energetic security, the terminology used to explain the prevention of crashes. Volvo is already a frontrunner in passive security, which seeks to stop harm and dying when a collision happens.
Bell says Volvo must do higher at reassuring drivers that their knowledge gained’t be shared with third events, suggesting it has struggled to achieve an satisfactory knowledge set to drive ahead with its technological ambitions.
Altering panorama
Volvo’s new deal with automation to establish security follows a number of different corporations working to automate their automobiles and cut back collisions. Tesla has led in innovation on this subject, however different carmakers are quick adopting related tech. Whereas full self-driving expertise stays a hypothetical concept, it additionally feels inevitable.
In a world the place all automobiles are automated, security may change into a default amongst all automotive manufacturers, moderately than a differentiator for Volvo.
Nonetheless, Erik Severinson, Volvo’s chief technique and product officer, advised Fortune that Volvo’s security proposition goes past automation.
“We’ll by no means compromise on passive security or all the opposite stuff which makes it extra protected. I feel security will nonetheless be a model differentiator going ahead, perhaps extra so than efficiency,” Severinson mentioned.
Lengthy-term shifts in demographics, in the meantime, are creating new buyer challenges in a number of industries. In Japan, an early harbinger of the fallout of a inhabitants slowdown, diaper producer Oji Holdings mentioned it might be pivoting to grownup merchandise amid plummeting demand for youngsters’s diapers.
Individuals throughout the Western world are additionally having fewer youngsters, a results of falling affordability and altering cultural norms that lead girls to have their first baby later of their lives.
With such an emphasis on new households because the goal for Volvo automobiles, it begs the query of whether or not a altering panorama may pose one other menace to Volvo’s security USP.
Whereas Severinson thinks the worldwide pattern of falling beginning charges is a worrying one, he doesn’t see it drastically affecting Volvo’s place available in the market.
“I imply, your children have pals,” Severinson advised Fortune of the potential for a falling childbirth affecting demand for his family-oriented model.
“Even when the variety of children is shrinking in complete in society, I feel the variety of households may nonetheless be comparatively the identical, it’s simply that you simply get you get fewer children. After which security will likely be simply as vital for these households, or much more so.”
