Report – Geely and Volvo still debate the future of the Swedish brand image

Volvo has been on a continuous tenure ever since we saw them establish their safety brand awareness – they flirt with the premium segment but also rooting for their Scandinavian clean and responsible look.

Under Chinese ownership since 2010, at the top of Volvo Car Corp there are still pondering debates on whether to become a luxury brand true to Chinese taste for excess and ‘bling’ or remain Safe, solid and understated in a Swedish way.

With two companies from cultures with deep roots, a culture clash between Volvo’s European management and Zhejiang Geely Holding Group Co GEELY.UL, the brand’s owner, may have broader implications for corporate China. If Geely prevails in refocusing Volvo on China’s premium market, it could chart a course for other Chinese firms with global ambitions.

According to four people close to Volvo and Geely, the Chinese firm’s billionaire owner Li Shufu believes China, where more than 1.2 million premium cars were sold last year, is key to Volvo’s future, and will help it hit a target of doubling annual global sales to 800,000 vehicles by 2020. Volvo’s year-on-year China sales grew by two-thirds in August to 4,319 cars. January-August sales were up 40% to 37,661 cars.

To get to its target, Li, who is chairman of both Geely and Volvo, wants the Swedish carmaker to come up with a large premium sedan aimed at China’s newly wealthy who tout their social status with German luxury cars, such as the Audi A8 and BMW 7-Series sedans.

Still, managers at Volvo are not keen. Hakan Samuelsson, chief executive since late last year, believes it’s too big a risk for Volvo to give up a niche cultivated over decades with a focus on safety and Scandinavian understatement and try to take on German luxury carmakers. This means he doesn’t want a new S80 to be a lot larger, in order to accommodate the Chinese taste for long wheelbase limousines.

While Li publicly touts the progress the two companies have made in upgrading Volvo’s technology – especially new “scalable” architecture underpinning a range of larger Volvo cars – two people close to Li say he is still trying to nudge Samuelsson to compete with the Audi A8, with a plusher and bigger model he calls the S100.

Via Reuters