Volvo Vehicles has a message for skeptical traders because it seeks to rebound from a inventory market hammering and stunted revenue margins: “Safety is our superpower.”
The family-oriented, safety-obsessed Swedish carmaker, has gained large 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 Vehicles, although, is at an inflection level as the worldwide automobile business struggles with slowing demand for electrical autos. With its share value slumping at a document low and doubts rising over its long-term technique, the automaker is taking a really cathartic strategy to advertising its distinctive promoting level: security.
Volvo is a “premium” model, in different phrases, a carmaker that has a product prospects are keen to pay a premium to acquire. Apart from its rising tech capabilities, that premium is security in Volvo’s case.
“You have your first child, you come home from the hospital, and you start thinking about safety in a much more visceral way,” Volvo CEO Jim Rowan informed an viewers throughout a Q&A at Volvo’s CMD.
“Safety is our superpower.”
Volvo has at all times mentioned that it believes prospects place a premium on security. When requested by Fortune how Volvo differentiates itself from Polestar, the struggling EV model with shut ties to Volvo by their shared majority shareholder Geely, Rowan doubled down on that distinction.
Whereas Polestar’s USP lies in its slogan “Pure progressive performance,” Volvo’s lies in “safety, sustainability, human-centric design, and family-oriented customers,” Rowan informed Fortune.
Volvo is combating a flat EV market. A number of components, together with falling shopper sentiment, the pullback of Authorities subsidies, and rising world tariffs, have helped push the carmaker’s inventory all the way down to a document low because it first floated publicly in 2021.
On Thursday, Volvo mentioned it could shift its key goal to rising market share within the premium class reasonably than growing income. Additionally it is 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, one of the best ways to develop is by taking prospects from different manufacturers.
To seize market share, Volvo is hammering dwelling 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 baby, leaping forward by the daughter’s adolescence.
In the direction of the tip of the advert, we reduce to the soon-to-be mom strolling throughout the highway when a careless Volvo driver almost runs her down. Nonetheless, she is halted by the automobile’s sensor, which spots an individual on the highway. Volvo says within the advert that typically 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 will 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 process with this superpower,” Bell mentioned of the usage of generative AI in its vehicles, “which is real-time, real-world insight, which will significantly shorten our path to conclusions.”
On Thursday, Volkswagen mentioned 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 forestall harm and dying when a collision happens.
Bell says Volvo must do higher at reassuring drivers that their information gained’t be shared with third events, suggesting it has struggled to achieve an satisfactory information set to drive ahead with its technological ambitions.
Altering panorama
Volvo’s new give attention to 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 subject, however different carmakers are quick adopting related tech. Whereas full self-driving know-how stays a hypothetical thought, it additionally feels inevitable.
In a world the place all vehicles are automated, security might turn into a default amongst all automobile manufacturers, reasonably than a differentiator for Volvo.
Nonetheless, Erik Severinson, Volvo’s chief technique and product officer, informed Fortune that Volvo’s security proposition goes past automation.
“We will never compromise on passive safety or all the other stuff which makes it more safe. I think safety will still be a brand differentiator going forward, maybe more so than performance,” Severinson mentioned.
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 mentioned it could be pivoting to grownup merchandise amid plummeting demand for youngsters’s diapers.
Folks throughout the Western world are additionally having fewer kids, a results of falling affordability and altering cultural norms that lead ladies to have their first baby 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 beginning charges is a worrying one, he doesn’t see it drastically affecting Volvo’s place out there.
“I mean, your kids have friends,” Severinson informed Fortune of the potential for a falling childbirth affecting demand for his family-oriented model.
“Even if the number of kids is shrinking in total in society, I think the number of families might still be relatively the same, it’s just that you get you get fewer kids. And then safety will be just as important for those families, or even more so.”
