Volvo weathers the storm
The Swedish group is adapting to a hurricane of change with a new image. Roger Trapp reports
Thursday 19 October 1995
Ever since it lumbered out of the Scandinavian forests, the Volvo has been the car that everybody has wanted to be in if they knew they were going to get hit by a truck. The problem was that, although everybody agreed that the huge estates were practical for farmers and antique dealers, nobody who fancied themselves as a bit of a Stirling Moss was going to admit to owning one. If the company was a watchword in safety, it was also seen as the epitome of boring.
The 850, and a restyled 960, are the first results of an attempt to add some enjoyment to the practicality of owning a Volvo. Other models are in the pipeline. But they are only the most obvious signs of something far more significant.
Since the proposed merger with the French group Renault was halted, Volvo has had to come to terms with going it alone in an increasingly competitive market. It is still involved in a number of joint ventures, such as the one that will see Audi diesel engines powering some models and the Edcar initiative owned equally by Volvo, Mitsubishi of Japan and the Dutch government. But for the most part, in the words of Charles Hunter- Pease, managing director of Volvo Car UK, the management has had a "clean sheet of paper" to establish a fresh strategy.
Though the plan to expand the customer base by taking on prestigious marques may appear sound, it brings certain problems. In particular, staff now find themselves trying to win over customers, when in the past they must have felt halfway to a sale as soon as somebody entered the showroom simply because Volvo had a clear image.
As if this were not enough, Mr Hunter-Pease is intent on changing the relationship between the company and the people who buy its products. Like just about everybody else in business, he wants greater emphasis on the customer. The difficulty he has is that the motor trade is noted for its heavy sales techniques.
Mr Hunter-Pease acknowledges this, saying: "To improve customer service, you've got to take away the pain of high-pressure selling." He wants to bring about a "fundamental shift in the way the industry thinks" and so change the "buying experience".
The twin drivers of this are the greater efficiency of manufacturing and the desirability of the products. And what they translate into is that customers can now choose the car they want for delivery within weeks and that the end product is desirable enough that they would want to spend time making decisions over such features as engine design, upholstery material and style of wheels.
By making the cars "bespoke", the dealer is able to concentrate on selling the customer what he or she wants, rather than pushing what is in stock in the interests of meeting sales targets, Mr Hunter-Pease says. Being able to achieve a better match in this way not only makes the customer more satisfied in the long term, it also helps to reduce the cost to them. Mr Hunter-Pease points out that the policy has helped to reduce the total number of cars in stock from 11,000 at the end of 1993 to a few hundred now, with consequent reductions in storage costs.
Moreover, conscious that getting the car from the plant to the customer can account for 30 per cent of the total cost, the company is constantly reviewing transport techniques. It believes it is the only manufacturer to specify delivery times in hours rather than days, and it is also keener on smaller transporters because they reduce the amount of time waiting for a full load.
Tied in with all this is the development of a database that will link the company headquarters in Marlow, Buckinghamshire, with its dealers and their satellite operations around the country. Besides helping dealers to locate cars, particularly used ones, requested by customers, it is anticipated that it will make the dealers more involved in the development of the business.
It has not all been rosy. Volvo UK now employs 399 people, compared with 610 four years ago. But Mr Hunter-Pease does not see that this threatens the ability to deliver customer service, since the job losses were brought about by reducing management layers; there are more people at the "front line" now, he insists.
Furthermore, he is unashamed about the need to reduce costs. The challenge, he says, is "finding the things you can scrap to protect the things you have to do to ultimately protect the investment in your product". The only way to achieve this is to involve the whole staff and to be open with them.
In order to remind them of his core beliefs, Mr Hunter-Pease recently gave each of them a watch with such slogans as "future", "focus", "fast" printed in place of the figures, and all of them centred around the central command of "fun", because, above all, that is what an organisation has to be.
As if to demonstrate that after 22 years with the company his sense of humour remains intact, he says that in trying to appeal to two markets the company today reminds him of Lucozade. When he was growing up in the Sixties, Lucozade was a health-giving drink favoured at times of distress or illness. Now it was a health-giving drink favoured by sporty people, but it was still by your bed.
"I wouldn't say we were the Lucozade of the motor industry, but there are some definite parallels," he says.
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