Volvo sets sights on Tesla, not BMW

Volvo's chief designer Robin Page is a happy man. Volvo has successfully reinvented itself over the past five years, shrugging off its dusty old conservative image by embracing an inherently stylish Swedish ethos.

Making inroads into the premium end of the new car market, Volvo has jammed more technology into its cars and upped its luxury game while making some brave moves with interior and exterior vehicle design, and Page has been key to the changes.

With two new sister brands expected to launch in Australia in the new decade – Polestar and Lynk & Co – along with car subscription services and a range of EVs, the days of boring old Volvos appear to be well and truly over.

"We started the journey five years ago when we said we need to beat Mercedes, BMW and Audi,” said Volvo's Senior Vice President of Design, Robin Page, who was in Australia for the local launch of the Volvo XC40 compact SUV last week.

"Now I'd say it's a bit different. We're being benchmarked against those guys and a lot of reports and reviews [are saying] we're beating them."

The Volvo XC90 and XC60 SUVs have helped push the brand to record global sales in 2017 -- up seven per cent (to 571,577 vehicles).

Locally, sales were down by 20 per cent in Australia (to 4681) in 2017, where the brand is a relative minnow. But the signs of a recovery are there with Volvo sales for the first four months of 2018 up by 26 per cent. Things are looking good in Volvo’s most important market – China – where sales boomed by more than 25 per cent for the full year of 2017.

The arrival of Volvo’s first compact SUV in Australia, the XC40, is expected to add a couple of thousand units to the brand's bottom line in 2018 and the unusual SUV epitomises the new philosophy the brand took under the ownership of Chinese car giant Geely back in 2010.

The Scandinavian brand's reinvention started with the XC90 large SUV in late 2014 and can be seen in its newer models such as the XC60 medium SUV, XC40 compact SUV, and the large S90 and V90 sedan and wagon. The new mid-size V60 and S90 will follow this year.

Despite the positive moves, Volvo has no plans to sit still and has seemingly moved on from its objective of catching its German rivals.

Page says the next challenge is to leapfrog Tesla.

"We've always had our eye on -- and I think the whole industry has -- on Tesla. Not so much from a design point of view but from a positioning and strategy point of view of pushing electrification … doing things differently. They're actually the new challengers now," he said.

Volvo has already stated it won't develop any new diesel engines from now on and that by 2019 every new model launched will be available with some form of electrification, whether it’s mild-hybrid, plug-in hybrid or full electric.

Company CEO Hakan Samuelsson went further recently, vowing that by 2025 half of all Volvos sold globally would be pure-electric vehicles. The world's largest new car market, China, will play a significant role in leading the sales charge.

But Volvo has to continue to innovate, insists Page.

A subscription-based car-leasing service in Europe, named Care by Volvo, has been launched and the company hopes to offer it in Australia within 18 months.

Customers pay a flat rate over two years that covers all car ownership costs, including servicing, with the ability to swap into a new vehicle and sign up another contract afterwards, not unlike a mobile phone plan.

Car-sharing is also being investigated as autonomous vehicle technology evolves and the company continues its vehicle supply deal with global ride-hailing service Uber.

Page explained that while its German rivals will still keep the company on its toes, the automotive landscape is changing so rapidly that traditional competitors are no longer the priority.

"I'm not saying that we've forgotten BMW and Audi -- not at all. They're huge companies with huge design facilities and ambitions and technology, but it's more the mindset of watching the technology drivers -- that's Tesla and other start-ups."