Braving it

SWETHA KANNAN | Updated on March 12, 2018 Published on January 10, 2013

New resolve: Volvo aims for 15 per cent of the luxury car market by 2020.   -  Bijoy Ghosh

Tomas Ernberg, Managing Director, Volvo Auto India.   -  Bijoy Ghosh

In India, Volvo reached a point where it had to shape up or ship out. It chose to stay on, and will focus on smaller cities to market its cars.

Sit back and relax in the spa while your car gets a good scrub. If you own a Volvo car, that is.

The Swedish luxury car maker plans to support its showroom in Chennai, at the Express Avenue mall, with a quick-service station nearby. This promises basic car service (not major repairs) in just an hour, and comes free with a Rs 1,000 voucher that customers can redeem at a spa, restaurant or theatre inside the mall.

Come back in an hour and drive away in style, says Tomas Ernberg, Managing Director, Volvo Auto India. This is the first such quick-service initiative in India. “It is better to have 3-4 technicians looking at one car for an hour, instead of one technician looking at one car for several hours.”

As Volvo tries to build its brand in the tough Indian market, Ernberg believes it needs more such out-of-the-box thinking.

Small is beautiful

But Volvo is no hurry to go for the kill as yet. The big markets of Delhi and Mumbai can wait, while we first tackle the smaller cities of Hyderabad, Kolkata and Chennai, says Ernberg.

This decision was taken last year when Volvo realised it wasn’t doing too well compared to competition. In 2011, it had sold just 325 cars – just over 1 per cent of the luxury car market in the country (25,000 units).

“We had to take a call – whether to leave the country or come up with a new strategy,” says Ernberg. Volvo bravely decided to stay on, with a focus on smaller markets.

“Volvo is a small player now and cannot afford to test-market in Delhi and Mumbai.” So, it chose Hyderabad – home to high net-worth individuals but not a market as daunting or Delhi or Mumbai. The Swedish car brand went all out to capture this market by creating touch points at places the rich frequent – restaurants, night clubs, yacht clubs and golf courses, besides organising a world golf tournament.

“We exhibited our cars at all these places where our people connected with trendy people. We even had Volvo images printed on coasters at restaurants,” says Ernberg with a hearty laugh.

The ploy seems to have worked. In 2011, Volvo had a market share of just 7 per cent in Hyderabad; in 2012, it shot to 22 per cent, beating Audi and Mercedes, to capture the number two slot, says Ernberg. “Headquarters Sweden has taken note of this focus-markets strategy.”

As a rub-off effect, Volvo’s India market share in 2012 too gradually climbed to 2.8 per cent, selling 810 units. This year, its target is 1,200 cars.

High five

Currently, Volvo is ranked fifth in the pecking order behind BMW, Audi, Mercedes and Jaguar Land Rover.

By 2020, car volumes in the country will touch five million – the luxury market will be 3 per cent of that at 150,000 units. Volvo is gunning for 15 per cent of this segment by then.

It is not just the upper class, but “the growing middle class is also hungry for luxury,” says Ernberg. “We are targeting educated professionals, businessmen and entrepreneurs who are knowledgeable about cars but do not want to show off.”

This year, Volvo aims for a 4 per cent share as it replicates the Hyderabad model in Chennai, Coimbatore and Kolkata and a few other tier-2 auto markets.

Volvo’s one-hour service centre in Chennai is part of this strategy. The brand has also been associated with the Chennai Open tennis tournament for four years now.

Other cities in Tamil Nadu are also on Volvo’s radar. The company, which has a 10 per cent market share in the State, plans to open its biggest showroom in Coimbatore and a service centre in Madurai. Volvo recently sponsored the Indian Road Congress in Coimbatore. (Incidentally, Coimbatore is an important global sourcing location for Volvo, for horns and radiators.)

About 5 per cent of Volvo India’s turnover goes into marketing. In most other markets, it is only 2-3 per cent. “Our marketing budgets have doubled in India in 2012,” says Ernberg, emphatically.

Volvo has 13 sales outlets in the country, up from five in the last 14 months. The company’s cars are skewed towards diesel. Volvo last year launched the new diesel engine variant of its S60 and S80 salons and XC60 SUV.

A sports wagon (V40 Cross Country), targeted at the sporty and adventurous, is slated for launch in March/April. It will compete with the BMW X1 and Mercedes B Class models.

“V40 is high on safety features and comes with air bags to cushion even pedestrians during a crash.”

Volvo’s entry level car is priced Rs 26 lakh. “We will not go lower than this. Instead, more premium and technologically advanced cars are in the pipeline this year,” signs off Ernberg.

Published on January 10, 2013
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