Volvo eyes DTC promise as electric sales grow

Volvo saw direct-to-consumer (DTC) sales rise by 9% in 2021, as consumers responded to the “convenience” of online car buying.

Ecommerce sales in markets where the service is available ramped up in the fourth quarter driven by growing customer demand, explained outgoing chief executive Håkan Samuelsson at the brand’s full year results today (11 February).

The Swedish car giant is using the UK market as a testbed for new DTC sales, following the success of its ‘Care by Volvo’ subscription model. Digital sales channels for used cars and B2B fleet sales are now being tested in the UK.

Total online sales nudged 10% of total sales in markets where Volvo’s Care by Volvo subscription service is available.

Last year also saw an acceleration in the sale of electrified vehicles. Sales of Volvo’s ‘Recharge’ range accounted for 34% of sales in the final quarter. Fully electric vehicles accounted for 6% of sales, while plug-in hybrid models represented 28% of sales.

These statistics are moving in the right direction, given last spring Volvo confirmed all future electric car ranges will be sold exclusively through online channels. The brand has declared that by mid-decade it has ambitions to see 50% of its sales to conducted online and 50% of its output to consist of fully electric vehicles. It also plans to achieve total sales of 1.2 million vehicles per year.

We have focused firmly on the needs of consumers, personalising the service so it works in the way that’s right for them.

Kristian Elvefors, Volvo

Overall, Volvo recorded its highest ever revenue and profitability figures in 2021.

The company posted revenue of SEK 282bn (£30.7bn) for the 2021 full year and SEK 80.1bn (£8.7bn) in its final quarter. The car marque sold just under 700,000 cars over the full year period – an increase of 6% – despite productivity being hampered by a semiconductor shortage creating problems for the wider automotive industry.

These figures include sales via the Care By Volvo subscription model – which had 17,000 active subscribers across six markets by the end of the year – and all sales of fully electric vehicles. The subscription service has driven the sale of 2,500 new cars in the UK in its first year, equivalent to 15% of the brand’s retail sales and 7% of its total new car sales in the UK.

“The UK is now our pilot market for taking this to the next step and we are also starting now with online business-to-business fleet sales, which is such an important part for the European car market,” says Samuelsson.

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As well as an online channel for B2B sales, the brand this month introduced Volvo Cars Selekt Direct in the UK, the first end-to-end online service for buying pre-owned cars direct from a manufacturer. The company described the initiative as a blueprint for its digital sales strategy.

The Selekt Direct service allows consumers to search, select and pay for the used car they want via a secure end-to-end transaction. The service can be accessed 24 hours a day.

According to Volvo UK research, consumers are showing increased interest in new purchase models, with one in four finding the DTC online purchase of a used car ‘very appealing’.

“We have focused firmly on the needs of consumers, personalising the service so it works in the way that’s right for them,” says Volvo Car UK managing director Kristian Elvefors.

“That means not just the convenience of direct online access, but also peace of mind that the process is secure, robust and delivers a premium experience that fully reflects the qualities of our brand.”