Volvo encouraged, diesel market declining

Volvo is confident that its electrification program can carry the day in Australia, despite electric vehicles and hybrids representing a tiny proportion of new vehicles sold in 2017.

"The announcement that we've made – the fact that we're going right down that electrification route – puts us right in that sphere of people looking to get into that type of car..." says Greg Bosnich, Director of PR at Volvo Australia.

"People are wanting to change... and we're at the forefront of [the global] electrification strategy."

While anecdotal evidence does suggest buyers are looking for better alternatives to internal-combustion engines – and particularly diesels – battery/electric vehicles and hybrids have accounted for fewer than 9500 passenger-car and SUV sales for the year to date, and that's barely one per cent of the market in Australia.

As for light commercial vehicles, electrics and hybrids are not even on the radar. Fortunately for Volvo, the Swedish brand doesn't sell light commercial vehicles.

Explaining Volvo's electrification commitment to motoring.com.au during the launch of the new XC60 last week, Bosnich reiterated that the announcement merely draws a line in the sand for diesel development. It doesn't mean the company will cease manufacturing diesel variants in 2019.

"There won't be any more investment into new technologies [for diesel]," he clarified. "So we obviously invested significantly in the current Drive-E engines, et cetera. Everything has a lifecycle... we've only just started the current cycle with the introduction of the XC90, which was one or two years ago.

"If you kind of look at lifecycles, most things have seven to eight years, so [diesel] is with us at least that period of time. But beyond that there is no further investment..."

By that measure, Volvo could continue building and marketing diesel vehicles right through to 2026 – a minimum of seven years in a development cycle on top of the cut-off in 2019. It leaves diesel available to Australian consumers for a number of years yet, potentially.

Bosnich says that Volvo's head office has not issued a statement committing to diesel in production for the foreseeable future. So there's a definite end in sight for Volvo diesels, with no money invested on future development, but the end for diesel combustion at Volvo may come sooner still, if the production, marketing and legislative planets align.

In Australia, Lexus – a direct competitor to Volvo in this country – has struggled to grow sales volumes promoting hybrids rather than diesels.

"It's customer-reliant, there's no doubt about it," Bosnich responded to that point, "[but] there's more and more people wanting to go toward electrification – and that's what we see.

That view is supported by VFACTS sales figures, which show diesel sales in the passenger and SUV classes are in decline… and to a significant degree. For 2017 so far, sales of diesel passenger cars and SUVs are still up around 120,000 units, but that's over 9000 fewer, year on year.

Bosnich believes that before long plug-ins and battery/electric vehicles will achieve the necessary level of consumer acceptance with the advent of better batteries.

"Technology will change; it will get better, the longevity of batteries will get better, the distance that you can travel will get better, the battery infrastructure will get better."

And in the meantime, buyers can still lay hands on an XC60 powered by a diesel engine...