Is Volvo’s latest marketing move just a prelude to a Ford sale?
Volvo’s latest marketing rejig (MW last week) comes amid a period of uncertainty for the Swedish marque, as rumours persist that Ford is looking to offload the brand after disposing of Jaguar and Land Rover. The speculation leaves Volvo, which has just completed a global advertising review, at something of a crossroads.
The company has promoted direct marketing manager Anita Fox to its top UK marketing position, following Paul Walder’s move to the global marketing team. In his new role, Walder reports to head of advertising Tim Ellis, who oversaw the £80m ad review that resulted in US agency Arnold and London independent Nitro being appointed to Volvo’s global business following a five-month pitch.
The agencies’ first work breaks this week to mark the launch of Volvo’s new 4×4, the XC70. They will also produce a major new brand campaign that will launch next year. But Volvo’s long-term future lies way above its marketing team and new agencies, in the hands of Ford, which bought the Swedish car-maker for $6.5bn (£3.2bn) in 1999 as part of an aggressive expansion strategy.
It was reported in July that Ford was willing to listen to offers for Volvo, which is widely regarded as the jewel in the crown of its European brands. One source told a national newspaper at the time: “Ford won’t confirm it officially, but the company has taken the decision to sell Volvo in the longer term. It is by far the most attractive asset.”
The move would leave the struggling US car giant, which lost a record $12.7bn (£6.3bn) last year, with only its own-badge cars and the Lincoln brand in the US. It sold Aston Martin to a British-led consortium for £479m in March, and has appointed Goldman Sachs, HSBC and Morgan Stanley to handle the auction for Land Rover and Jaguar.
Desperate measures
Analysts have estimated that Volvo could be worth up to $8bn (£4bn) and assistant director of the Institute of Automotive Industry Research Paul Nieuwenhuis says: “The sensible thing to do would be to hang on to Volvo because it’s been consistently profitable. It seems stupid to sell it, but if they’re desperate enough, that’s what they’ll do.”
Volvo has traditionally been known for its safe and reliable cars, but it has recently begun to attract younger buyers. The new C30 hatchback, launched earlier this year, is a deliberate attempt to reach out to younger buyers. Nieuwenhuis adds: “The C30 is a fairly unusual product – it’s a more stylish hatchback. Volvo is moving with the times and that has really been its strength.”
Individuality
Chairman of branding agency Corporate Edge Chris Wood believes there are parallels between Ford’s situation with Volvo and the challenge General Motors has had integrating Saab into its portfolio. “Both inherited brands had their own personalities, but were too frail,” he says.
“But Volvo has come quite a long way under Ford, moving from Swedish tank to stylish car, with character that is not totally devoid of sex appeal. Whether it has gone far enough I don’t know.”
Possible suitors for Volvo include Renault and Peugeot – neither of which have luxury marques – as well as BMW and private equity groups. Wood thinks that any potential bidder would be advised to continue with Ford’s strategy for Volvo.
“I’d compare Volvo – and Saab – to toddlers,” he adds. “They are both growing up slowly, but still need an awful lot of looking after to bring them to full adulthood. I don’t think anybody could afford to buy Volvo and completely redirect the brand again. It would be a very long and expensive job to change the personality again.”
