Volvo Cars wants to double its sales by 2025,
announced in a press release packed with mid-decade targets.
As reported by Business Insider the ambitious sales goal would mean an increase of today’s 600,000 sold cars per year to 1,2 million, a figure that would match premium brands such as Audi and BMW.
Volvo hopes 50% of cars sold by 2025 will be fully electric, with the rest hybrids.
Hakan Samuelsson, President and CEO of Volvo Cars had this to say to Business Insider “Our customers’ expectations are changing rapidly. This means that Volvo Cars is also changing rapidly. These initiatives will help transform Volvo from being purely a car company to being a direct consumer services provider,”
Volvo Cars also said it wants to create direct relationships with millions of customers through its subscription service, Care by Volvo, and other initiatives.
Lisa Bergström, Managing Director at Copperberg had her say:
“Volvo has always been associated with high quality and safety, it is a brand with a strong identity, at least here in Sweden where Volvo was founded. Moving towards a “one-stop shop service” for its customers should probably increase their customer base. We see this a lot – where consumers now force us into an experience economy, the more added value a product or service can bring, the more loyal your consumer base becomes. Having all the services embedded into a subscription model also follows the trend of the picky consumers that easily jump between suppliers. By acknowledging that the consumer behaviour has changed, I truly believe Volvo will pave the way for new business models.”
Volvo’s targets mean the company should be growing at around 15 percent per year towards 2025.
Last year, the group’s operating profits grew by 28 percent to 14 billion SEK ($1,6 bn). Profit margins fell from 7,3 to 6,4 percent last quarter compared to the year before, partly due to increased spending on research and marketing.
Volvo Cars transformation towards 2025:
- IPO plans. Volvo’s parent company, Geely, is planning an initial public offering of Volvo Cars. The Chinese car group has said it won’t float unless Volvo Cars earns a valuation of at least $30 billion. Analysts said to FT that figure was high.
- Autonomous cars. Volvo wants one third of sold cars to contain autonomous tech. Last year, the company received a preliminary order of 24,000 self-driving cars aimed for Uber’s robo-taxi fleet.
- Subscription service & recurring revenues. Volvo hopes half of its sales will be through Care by Volvo subscriptions by 2025. The company aims for 5 million direct consumer relationships as a driver for recurring revenue, through “connected and other services.”
- Connected cars. Volvo plans to open its network to mobile operators like Android, the FT reported.
Thomas Igou, the Editorial Director for Aftermarket Business Platform shared his thoughts on this latest development
“It’s a diversified approach from Volvo. For the moment at least, and unlike some competitors, they are not starting their own car-sharing business, but instead focusing on selling their cars to the likes of Uber. It’s good because it allows for great for both a commitment to sales volume as well as great potential for service revenue (and profit!) from maintaining those fleets.”
“On the flipside, they’re also entering the subscription model, which is all about removing all the barriers from generation Y owning a car. If you look at the value proposition of Care by Volvo, it’s all about creating a frictionless experience to acquire a new customer base. That’ll be key to hit that target by 2025.”
Source > Business Insider