Image Source: Dugou

Taken at the Shanghai Auto Show in April 2023

After experiencing two "high-level shakeups" within half a year, Volvo Cars' anticipated transformation and take-off in China seem to have failed to materialize.

According to recently released official data, in May this year, Volvo Cars sold 68,000 vehicles globally, representing a year-on-year increase of 13%; for the first five months of this year, its global total sales reached 316,600 vehicles, an increase of 15% compared to the same period last year.

However, the brand only sold 13,900 vehicles in the Chinese market in May, a decrease of 1% compared to the same period last year; although cumulative sales from January to May increased by 2% year-on-year to 64,100 vehicles, it is still a relatively poor performance compared to the double-digit growth in the European and American markets.

Moreover, in the energy sector where emphasis is placed, the Chinese market is also the only market among Volvo's three major markets that has seen a decline. In the first five months of this year, Volvo Cars sold only 4,808 electric vehicles (fully electric and plug-in hybrid models) in the Chinese market, a significant year-on-year decrease of 23%.

Such results are unlikely to satisfy Volvo Cars. To promote the transformation, in August and December last year, Volvo Cars Greater China twice "changed leadership," first appointing Pan Hesong, the former general manager of Volvo Cars Japan, as the president of Volvo Cars Greater China Sales Company, and later announcing that Yu Kexin, the former vice president of Volvo Cars Greater China Sales Company, would serve as the acting president of the sales company. However, the results do not seem obvious.

Now, Volvo Cars has pinned its hopes on the all-electric SUV, the Volvo EX30, which was officially launched in China not long ago. The car has been quite popular since its overseas launch. So, will it become a "hero" in enhancing the brand's presence in the new energy sector in the Chinese market?

1

Disappointed in New Energy

According to data, Volvo Car Group, founded in 1927, is a world-renowned luxury car manufacturer headquartered in Gothenburg, Sweden, with a history of nearly a century. For nearly a century, Volvo Cars has been renowned globally as "the safest car in the world," gaining the love of many consumers.

And its entry into the Chinese market has been for over 20 years. As early as 1994, Volvo Cars set up an office in Beijing; in 2008, it established a sales company in Shanghai; in January 2011, Volvo Car Group China was established in Shanghai; in February of the same year, Volvo Cars established China as its "second home market"; in 2014, three factories established by Volvo Cars in China were completed and put into production...

It is worth mentioning that in 2010, Zhejiang Geely Holding Group successfully acquired Volvo Car Corporation and fully promoted Volvo Cars' global revival. Since the acquisition, Volvo Cars has continuously rejuvenated and achieved one excellent result after another in the Chinese market.

In terms of sales, in 2017, Volvo Cars' annual sales in China reached 114,400 vehicles, representing a year-on-year increase of 25.8%, higher than the average level of the Chinese luxury car market. By 2019, Volvo's sales in Greater China reached 161,400 vehicles, a year-on-year increase of 18.2%, of which sales in mainland China alone reached 154,600 vehicles.

From 2020 to 2022, Volvo Cars' sales in mainland China remained stable, achieving 166,300, 171,400, and 162,000 vehicles respectively. Although Volvo Cars did not disclose the specific sales figures for mainland China last year, it showed that sales in Greater China reached 180,200 vehicles, a record high.

In theory, this is a gratifying achievement, but a closer look at the sales composition of Volvo Cars reveals that it is not entirely worry-free. In the hottest new energy sector in China, the pace of transformation does not seem to be as smooth as planned.

As the first automaker among luxury brands to announce a comprehensive transition to electrification, Volvo Cars stated as early as 2017 that it would make electrification the core of its future development and that all new models launched by Volvo since 2019 would be equipped with electric motors, marking the end of Volvo's era of single pure internal combustion engines.

Last September, Volvo Cars even announced that it would stop producing diesel cars by early 2024 and only sell pure electric vehicles by 2030, aiming to become a climate-neutral company by 2040. As a result, Volvo Cars became the first mainstream traditional automaker to completely abandon diesel cars.

The determination is strong, and the start is also early. However, judging from the current transformation results, its foundation is not that good, raising concerns about whether it is too aggressive to stop producing diesel cars in early 2024.

The past two years have been crucial years for Volvo's comprehensive promotion of electrification transformation in China. According to the official statement, in 2022, the brand's pure electric models achieved a breakthrough, with annual sales increasing by 201% year-on-year, but specific sales figures were not disclosed. The same was true last year, as Volvo Cars only mentioned achieving a good performance of a 25% year-on-year increase in sales of new energy models in the mainland China market, without disclosing specific performance.

Finally, this year, we see that Volvo Cars sold 4,808 electric vehicles (fully electric and plug-in hybrid models) in the Chinese market in the first five months, but this time it is not an increase but a year-on-year decline of 23% compared to 6,271 vehicles in the same period last year.

And based on this calculation, the average monthly sales of Volvo Cars' electric vehicles have been less than 1,000 vehicles since the beginning of this year, which is hardly impressive in the increasingly fierce competition in the domestic new energy vehicle market, casting a shadow over its future transformation prospects.

2

Struggling with "Oil-to-Electricity"

In fact, Volvo Cars has not been without effort in the matter of electrification transformation. It has not only resolutely shouted slogans for transformation multiple times but has also continuously increased its efforts in personnel and products.

For example, in terms of personnel, on August 21 last year, Pan Hesong, the former general manager of Volvo Cars Japan, returned to China to serve as the president of Volvo Cars Greater China Sales Company, reporting to Yuan Xiaolin, to fully promote the sustainable development of Volvo Cars in the Chinese market.

When Volvo Cars officially announced the personnel changes, it mentioned that Pan Hesong "had led Volvo Cars to a leading position in the Japanese high-end electric vehicle market during his previous tenure in the Japanese market, and believed that his experience would further promote Volvo Cars' electrification transformation in the Chinese market."

Volvo Cars has also repeatedly emphasized that the adjustment of the Chinese management team is related to promoting the electrification transformation, reflecting Volvo Cars' determination to transform into electrification.

However, four months later, Volvo Cars officially announced that Yu Kexin would serve as the acting president of the sales company in Greater China starting January 1, 2024, and Pan Hesong would serve as the head of commercial operations for the Asia-Pacific region outside of Greater China. This move left some people puzzled, with sources saying it was because "Chinese people understand the Chinese market better."

In terms of products, last year, Volvo Cars welcomed several new progress in pure electric models. For example, the Nordic pure electric luxury MPV, Volvo EM90, made its global debut and opened pre-orders in mainland China. This is a pure electric MPV model crafted by Volvo Cars, dedicated to ushering in a new era of luxury MPVs.

In addition, Volvo Cars has accelerated the exploration of new business models suitable for this, becoming the first luxury brand in the industry to test the direct sales model. As of the beginning of this year, in addition to having nearly 300 dealer operating outlets, there are already 46 urban center stores and brand experience stores.

At the same time, Volvo Cars has continuously improved its energy replenishment system, covering four scenarios: home charging, public charging, dealer charging, and emergency charging. According to official data, as of the beginning of this year, Volvo Cars has collaborated with third-party partners to access over 600,000 charging resources, covering more than 330 cities.

With so many efforts, why are Volvo Cars' domestic new energy results still below expectations? "Car Visibility" believes that an important reason may be that the above efforts have not yet entered the harvest period, and most of the new energy models currently sold by Volvo Cars are "oil-to-electricity" models and cannot be considered truly electrified products.

Previously, Volvo Cars had launched several electric vehicles for the market, such as the XC60 RECHARGE, S90 RECHARGE, XC40 RECHARGE, C40 RECHARGE, and S60 RECHARGE, but these models are all based on existing gasoline-powered cars, commonly known as "oil-to-electricity" models.

In today's intelligent automotive era, as "oil-to-electricity" models mostly exude the aura of old gasoline-powered cars from the last century, domestic consumers do not have a high recognition of such electric vehicle products, and the RECHARGE models have naturally failed to achieve sales explosions in the Chinese market.

According to Dongchedi data, as of the end of May in the past year, the best-selling electric vehicle currently sold by Volvo is the XC60 RECHARGE, but its cumulative sales are only 5,603 vehicles, with an average monthly sales of less than 500 vehicles, which is negligible compared to new forces' products that often sell tens of thousands of units.

Although Volvo Cars' determination to "cut off the arm" and transform is admirable, it still needs to be more diligent in terms of products and accelerate the launch and delivery of truly electrified products.

3

Betting on New Products

According to Volvo Cars' plan, 2024 will be a crucial year for the brand to fully develop its electrification in the Chinese market. In addition to the pure electric MPV model Volvo EM90, two other heavyweight pure electric products will be launched successively in mainland China this year: one is the all-new pure electric flagship SUV, Volvo EX90, and the other is the all-new pure electric luxury SUV, Volvo EX30.

It is known that these three models are not "oil-to-electricity" products, but whether they can support Volvo Cars' transformation determination remains questionable.

Taking Volvo EM90 as an example,质疑声followed after its release. The reason is that many netizens felt that the side and rear of the Volvo EM90 were highly similar to the Zeekr 009. Not only were elements such as the A-pillar, C-pillar, and floating roof design similar, but even the body width and wheelbase were basically the same.

Moreover, both the Volvo EM90 and the Zeekr 009 are built on the SEA Haohan architecture platform, belonging to the same platform of products, so some people even refer to the Volvo EM90 as a "rebadged Zeekr 009," believing that although there is still room in the new energy MPV market, it will not only compete with strong opponents such as the Tengshi D9 but may also encounter the embarrassment of "fighting in the same room" with the Zeekr 009.

Then there's the Volvo EX90, which is based on the SPA2 original pure electric platform and adopts a centralized electronic and electrical architecture, while also being equipped with Luminar lidar and the DUS driver perception system, among others, and is highly anticipated.

However, the Volvo EX90, which was originally scheduled to go into mass production and be launched in early 2024, has been delayed to the middle of 2024 due to the "complexity of software code" of its lidar system, and it seems unlikely to be expected in the short term.

Finally, let's take a look at the Volvo EX30. As the most economical electric vehicle under the company, this car should be the most hopeful to carry Volvo Cars' new energy sales flag in China. Since its overseas launch, the Volvo EX30 has been highly sought after, with vehicles hard to come by.

Volvo Cars' Chief Commercial Officer and Deputy CEO said that the Volvo EX30 sold 14,500 units in the first quarter, quickly becoming "one of the best-selling pure electric vehicles in Europe." As of May, sales have exceeded 35,000 units. According to DataForce research, the Volvo EX30 is the third best-selling electric vehicle in Europe, behind only the Tesla Model Y and Model 3.

On May 19 this year, Volvo Cars grandly held the China launch event for the Nordic intelligent pure electric SUV EX30 in Gothenburg, Sweden, marking the official entry of this new energy model, with a suggested retail price ranging from 200,800 yuan to 255,800 yuan, into the Chinese market.

However, the same situation has reappeared. As both the car and the Zeekr X use the Geely SEA Haohan platform, and their hardware performance parameters are basically equivalent, it has again been questioned by netizens as a "rebadged Zeekr X."

More worryingly, according to news from several automotive media, Volvo Cars recently announced that it would recall all 71,956 EX30 electric SUVs produced so far due to a software fault. The fault may cause the speedometer to abnormally enter test mode when starting, affecting driving safety.

It seems that although the Volvo EX30 has made a strong start overseas, software issues may affect its development momentum, and it remains uncertain how it will perform after delivery in the domestic market.

Whether Volvo Cars can achieve high growth in the Chinese market after these truly electrified products are launched remains to be seen.

Author: Bai Yuan

Source: Car Visibility

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