Volvo Says Its Electric Cars Will Increase Profit, Drive Sales
Volvo Cars announced new business ambitions that combine several megatrends – electric cars, autonomous driving cars and direct relations with customers through a subscription service.
By the middle of the next decade, the Swedish brand would like to:
- generate half of all sales annually from fully electric cars by 2025
- one third of all cars sold to be autonomous driving cars
- half of all cars it offers to customers from its subscription service
Volvo, after refreshing its lineup in recent years, is increasing sales at a healthy pace (for an established manufacturer) of 13.3% in May and 13.6% over the first five months of 2018.
Volvo Cars would like to achieve high profitability, while most of the car sales will be all-electric or plug-in hybrids, which suggests that there is a clear path of viability seen for plug-ins.
“Volvo Cars expects these initiatives to transform its connection to its customer base, with the aim to build a total of over 5 million direct consumer relationships by the middle of the next decade, creating new sources of recurring revenue. This will also offer the company far greater potential to develop connected and other services for customers.”
“On the financial side, Volvo Cars aims to generate premium level profitability in line with other premium car makers, driven by increased sales and revenues across all three global sales regions, and a broader range of cars including sales to the new segment of autonomous ride-hailing companies.
The company’s improved financial performance will also be driven increasingly in the future by industrial synergies generated with its affiliated partner companies.
Volvo Cars expects to benefit from lower procurement costs, shared development costs and economies of scale alongside Polestar, its premium performance electric car brand, and LYNK & CO, the new global car brand in which Volvo Cars owns a 30 per cent stake.”
Hakan Samuelsson, president and chief executive said:
“Our customers’ expectations are changing rapidly. This means that Volvo Cars is also changing rapidly. These initiatives will help transform Volvo from being purely a car company to being a direct consumer services provider,”.
“This paves the way for Volvo Cars to continue growing fast into the middle of the next decade. The company has been transformed since 2010 into a global premium car company. Now it is time for this transformation to be turned into a period of sustained profitability in line with other premium brands.”