Why Volvo's new XC40 compact SUV comes with its own concierge

By Bloomberg News, September 25 2017
Why Volvo's new XC40 compact SUV comes with its own concierge

Volvo, unveiling its first compact sport utility vehicle, is moving beyond eye-catching design and dashboard gadgetry by offering to eliminate some of the hassles of owning a car.

The XC40 will be available across Europe from the end of September for €699 (US$840) per month over a two-year contract, the Swedish carmaker says.

That flat fee covers taxes, insurance, basic maintenance, and, where available, a concierge service to handle tasks like fueling, cleaning and delivering e-commerce purchases to the car.

“We will really be one of the most SUV-centered car companies of the world,” Chief Executive Officer Hakan Samuelsson said in an interview in Milan after the presentation of the SUV.

Volvo is on track to reach its target to sell 800,000 vehicles a year by 2020 with the XC40 providing a key lift.

The new compact SUV will go head-to-head with popular models like BMW's X1 and Mercedes-Benz’s GLA in the rapidly expanding segment. More premium crossover models are likely to enter the fray as carmakers seek to emulate the success of larger models and appeal to urban drivers.

Demand for cars like Jaguar’s E-Pace, which is short enough for city parking, is set to jump some 47 percent to 1.68 million vehicles annually by 2020, according to IHS Automotive.

“The market for such vehicles looks set to rise,” IHS analyst Ian Fletcher said in a report. Customers “have transferred their allegiances from traditional hatchbacks, sedans and estates.”

By easing the burdens of ownership, Volvo is adapting to the changing landscape, especially in cities, where customers have more options for getting around and show less interest in buying a car.

It also demonstrates how companies increasingly straddle the twin roles of manufacturer and service provider – even as making money with offerings like car sharing remains a struggle. The XC40 will be shareable among an unlimited number of friends and family through a digital key that’s accessed by smartphone, Volvo said.

The vehicle marks another step in Volvo’s revival since Chinese billionaire Li Shufu purchased the brand from Ford in 2010.

Since introducing the revamped XC90 SUV in 2014, the first car to be overhauled under its new owner, Volvo has seen its sales and profitability rise.

At the same time, ties with parent Zhejiang Geely Holding Group have grown as Li pursues plans to establish a global presence for the upscale Lynk & Co. brand, while spreading the cost of developing battery-powered vehicles.

“We have a stable owner that really believes in Volvo, and it happens to be Chinese,” Samuelsson said.

The shareholder change has been “extremely positive for Volvo.”

The XC40, which will later be available in an electric version, will be the first to be made on the compact-car platform Volvo developed with Geely.

While manufacturing will kick off in Belgium, assembly will start next year in China’s Luqiao, 350km south of Shanghai, with the car sharing the production line with vehicles from the Lynk brand.

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