Volvo Automobiles has a message for skeptical traders 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 received enormous market share with younger households over its almost 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 business struggles with slowing demand for electrical autos. With its share value slumping at a report low and doubts rising over its long-term technique, the automaker is taking a really cathartic strategy 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 prepared to pay a premium to acquire. Other than its rising tech capabilities, that premium is security in Volvo’s case.
“You may have your first youngster, you come residence from the hospital, and also you begin serious about security in a way more visceral manner,” Volvo CEO Jim Rowan informed an viewers throughout a Q&A at Volvo’s CMD.
“Security is our superpower.”
Volvo has at all times stated 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 via 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 informed Fortune.
Volvo is battling 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 right down to a report low because it first floated publicly in 2021.
On Thursday, Volvo stated it will shift its key goal to rising market share within the premium class quite than growing income. It is usually ditching a pledge to solely promote electrical vehicles from 2030, extending its sale of hybrids into the subsequent decade. In a flat market, the carmaker says, the easiest way 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 youngster, leaping forward via the daughter’s early life.
In direction of the top of the advert, we lower to the soon-to-be mom strolling throughout the highway when a careless Volvo driver almost runs her down. Nevertheless, she is halted by the automotive’s sensor, which spots an individual on the highway. Volvo says within the advert that generally the moments that don’t occur are a very powerful of all.
Volvo’s security premium
Volvo’s security ambitions are getting a lift with synthetic intelligence.
Volvo’s chief of engineering and know-how officer, Anders Bell, described how 50 years in the past, the carmaker could 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 stated of using generative AI in its vehicles, “which is real-time, real-world perception, which is able to considerably shorten our path to conclusions.”
On Thursday, Volkswagen stated 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 lively security, the terminology used to explain the prevention of crashes. Volvo is already a frontrunner in passive security, which seeks to stop harm and loss of life when a collision happens.
Bell says Volvo must do higher at reassuring drivers that their knowledge received’t be shared with third events, suggesting it has struggled to achieve an sufficient knowledge set to drive ahead with its technological ambitions.
Altering panorama
Volvo’s new concentrate on automation to determine security follows a number of different corporations working to automate their vehicles and scale back collisions. Tesla has led in innovation on this discipline, however different carmakers are quick adopting comparable tech. Whereas full self-driving know-how stays a hypothetical concept, it additionally feels inevitable.
In a world the place all vehicles are automated, security might turn out to be a default amongst all automotive manufacturers, quite than a differentiator for Volvo.
Nevertheless, Erik Severinson, Volvo’s chief technique and product officer, informed 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 secure. I believe security will nonetheless be a model differentiator going ahead, possibly extra so than efficiency,” Severinson stated.
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 stated it will be pivoting to grownup merchandise amid plummeting demand for kids’s diapers.
Individuals throughout the Western world are additionally having fewer kids, a results of falling affordability and altering cultural norms that lead girls to have their first youngster later of their lives.
With such an emphasis on new households because the goal for Volvo vehicles, it begs the query of whether or not a altering panorama might pose one other menace to Volvo’s security USP.
Whereas Severinson thinks the worldwide development of falling start charges is a worrying one, he doesn’t see it drastically affecting Volvo’s place available in the market.
“I imply, your youngsters have mates,” Severinson informed Fortune of the potential for a falling childbirth affecting demand for his family-oriented model.
“Even when the variety of youngsters is shrinking in whole in society, I believe the variety of households would possibly nonetheless be comparatively the identical, it’s simply that you just get you get fewer youngsters. After which security will probably be simply as necessary for these households, or much more so.”
