As Volvo Cars seeks to recover from plummeting share price and shrinking profit margins, it has a message for skeptical investors: “Safety is our superpower.”
The family-oriented, safety-focused Swedish automaker has won big market share among young families over its nearly 100-year history thanks to its low crash injury rates.
According to one report, the company’s flagship SUV, the XC90, launched in 2002, Death of driver or passenger Reported in the UK
But Voblo Cars is at a turning point as the global auto industry struggles with waning demand for electric vehicles. With its stock price at an all-time low and questions raised about its long-term strategy, the automaker is taking a rather cathartic approach to touting one of its unique selling points: safety.
Volvo is a “premium” brand, meaning it is an automaker with products that customers are willing to pay a premium for – in Volvo’s case, that premium is safety as well as improved technology.
“When your first child is born and you come home from the hospital, you start thinking more instinctively about safety,” Volvo CEO Jim Rowan told the audience during a Q&A at Volvo’s Commercial Driving Show.
“Safety is our superpower.”
Volvo has always maintained that its customers value safety. luck When asked how Volvo is differentiating itself from struggling EV brand Polestar, which is closely linked to Volvo through majority shareholder Geely Automobile, Rowan highlighted the difference.
Polestar’s USP is its slogan “pure progressive performance,” while Volvo’s USP is “safety, sustainability, human-centred design and family-oriented customers,” Rowan said. luck.
Volvo has struggled with the sluggish EV market, with the automaker’s shares hitting an all-time low since listing in 2021 due to several factors including declining consumer confidence, the withdrawal of government subsidies and rising global tariffs.
Volvo said Thursday it would shift its primary goal to growing market share in the luxury category instead of growing sales, and it also backed away from a pledge to sell only electric cars from 2030, extending sales of hybrids into the next decade. Automakers say the best way to grow in stagnant markets is to steal customers from other brands.
To gain market share, Volvo is emphasizing its safety proposition.
During its 90/90 presentation on Wednesday, Volvo unveiled its new hybrid XC90 and electric EX90 vehicles with a highly dramatic ad detailing a couple expecting their first child and getting a head start on their daughter’s development.
Towards the end of the ad, the scene cuts to a mother-to-be walking across the road and nearly being hit by a careless Volvo driver. However, the car’s sensors detect a person on the road and the woman stops. Volvo says in the ad that sometimes it’s the moments that don’t happen that matter the most.
Volvo Safety Premium
Volvo’s approach to safety is further enhanced by artificial intelligence.
Volvo’s chief engineering and technology officer, Anders Bell, said that 50 years ago, the company would go to accident scenes with tape measures to evaluate skid marks and other signs of a crash to help Volvos design cars, and it also brought in behaviorists to better understand how people behave in the lead-up to an accident.
“Now we’re going to put this superpower into that process,” Bell said of the use of generative AI in cars. “Real-time, real-world insights will drastically shorten the path to a conclusion.”
Volkswagen said Thursday it was expanding its partnership with Nvidia, using its core computing chips in collaboration with one of the world’s largest companies.
The group’s technology partnerships, which also include Google, Qualcomm and Luminance, will give drivers more metrics to improve active safety, a term that describes crash prevention. Volvo is already a leader in passive safety, which aims to prevent injuries and deaths in crashes.
Bell said Volvo needed to give drivers better assurances that their data would not be shared with third parties, and suggested the company was struggling to get a sufficient data set to drive its technology ambitions.
A changing landscape
Volvo’s new focus on automation for safety decisions follows efforts by several other companies to automate cars and reduce crashes. Tesla has led the way in innovation here, but other automakers are rapidly adopting similar technology. Full self-driving technology remains a hypothetical idea, but it seems inevitable.
In a world where all cars are automated, safety may no longer be a differentiator for Volvo, but the default for all car brands.
But Erik Severinsson, Volvo’s chief strategy and product officer, said: luck Volvo’s safety proposals go beyond automation.
“We will never compromise on passive safety or any other aspect that enhances safety. We believe safety will continue to be a brand differentiator rather than performance,” Severinsson said.
Meanwhile, long-term demographic shifts are creating new customer challenges across several industries. In Japan, a bellwether for the impacts of a declining population, disposable diaper maker Oji Holdings announced it would shift its focus to adult products amid a sharp drop in demand for baby diapers.
Across the Western world, people are also having fewer children as a result of less economic means and changing cultural norms that are leading women to have their first children later in life.
The focus on targeting new families for Volvo cars raises the question of whether the changing environment could pose new threats to Volvo’s USP of safety.
Severinsson believes the global trend of declining birth rates is worrying, but doesn’t believe it will have a dramatic impact on Volvo’s market position.
“So your child has friends,” Severinson said. luck They are concerned that a decline in births could impact demand for family brands.
“Even though society as a whole is having fewer children, I think the number of families is relatively the same. They’re just having fewer children. So safety is going to be just as important, if not more so, for those families.”
