Truck, bus or car?

Two companies, one brand. Volvo in India faces a unique situation.

The weekend before last, Volvo Car opened its first showroom, in Delhi, to showcase two models "" the sports utility vehicle XC90 and the S80 sedan "" about six months after launching its cars in the country. But Volvo's already a well-known brand in India. Only, not as a maker of cars.

With its fiery red trucks and comfortable-like-never-before buses, the brand has revolutionised commercial transport in India over the past decade. But that positive rub-off is unlikely to make the entry into cars any easier.

Though the commercial vehicles established the beachhead for the brand in India, selling passenger cars is much more complex. Especially in a country where German premium marques rule the roost.

Although Volvo's credentials as a carmaker is proven globally, the brand is in a situation that is probably unique even to the automobile industry: brand Volvo belongs to two companies, Ford and Volvo.

In the mid-1990s, when Volvo's Swedish owner Volvo AB hived off its cars division to Ford Motors and retained its commercial vehicles business, both businesses were given the right to sell under the Volvo badge. That makes the marketing task a bit challenging.

Think Volvo
In India, the problem is compounded as few customers think Volvo when it comes to cars. After all, Volvo cars have been introduced in India a decade after Volvo entered the commercial vehicles business.

In other markets, the time lag between the introduction of the two businesses is considerably lower, accepts Paul de Voijs, managing director, Volvo Car India. Globally, the time lag is just about two to four years.

And in most countries, it is the car business that leads the way as it takes the brand to the masses, agrees Eric Leblanc, managing director, Volvo India, the company that manufactures and sells trucks, buses and construction equipment in India.

What made Volvo Car wait so long for an India launch? The timing could not be better, if company executives are to be believed, as it is more acceptable to show success now in the form of premium cars, jewellery or designer wear than it was, say, five years back.

de Voijs, who is an emerging markets champion for the company "" his previous assignment was Russia "" points out that India is better placed than Russia on two counts; India's GDP growth is superior and it has a far higher number of millionaires.

As for the market potential, 100,000 units of premium cars "" each with a price tag of over Rs 25 lakh "" are sold in Russia every year, compared to a couple of thousand units in India.

The challenge for Volvo is to ensure that it fits the consideration set of premium car buyers, where its competitors "" Audi, BMW and Mercedes-Benz "" are well-placed in any top-of-the-mind recall study.

That's a challenge, accepts de Voijs. So how does he propose to meet it? While Volvo will have a traditional communication exercise, like conventional advertising, a consistent feel across all dealerships and so on, the company's strategy is to take the car to potential buyers, rather than wait for them to land up at showrooms.

To let prospective buyers spend more time with the car during test drives, the company plans to design test tracks for customers to test off-roaders like the XC90 and also do comparison tests. "After all, the proof of the pudding is in the eating," laughs de Voijs.

The other is to build on the common brand attributes of the Volvo brand and translate it to cars. "We [commercial vehicles and cars] share certain values like safety, environment consciousness and comfort that are a part of the brand's Swedish heritage," says Leblanc.

But in the premium car category, aren't these benefits hygiene factors? To an extent, yes, admits de Voijs, but he adds that Volvo is ahead on environment innovation, with fittings like the diesel particulate filter to promote clean emissions in diesel vehicles in India.

That apart, Volvo is synonymous with automotive safety globally. Another point in Volvo's favour is its cars are considered stylish and have a Swedish sensibility when it comes to design. A car's appearance is key in this customer consideration set.

Diplomatic moves
Still, the brand is unlikely to be the first luxury car in Indian households for some time, at least. de Voijs agrees: "Our current customer profile is likely to be the buyer who already owns a BMW or a Mercedes and wants to buy the newest car that is launched."

To be seen and admired by opinion makers, the company is targeting the expat crowd by selling to diplomats who work for foreign embassies. Globally, Volvo has a well-established diplomat sales programme. The advantage by selling to this small group: they move around in the right circles.

Plus, embassies can import cars without paying the high import tariffs that most Indian customers pay. de Voijs says that the company has already sold about 20 cars in Delhi through this source of business. The company will soon focus its efforts on the Mumbai consulate market as well.

King size life
Besides its obvious strengths like safety, design and eco-consciouness, Volvo is also appealing to the premium car buyers' penchant for value.

"If you do a value analysis on the size, specifications and the luxury offered, our offering is far superior," says de Voijs. For instance, the S80 and the XC90 come with a 4.4-litre V8 petrol engine option, which is the most powerful in their respective categories compared to the big three German nameplates. Besides, the cars are loaded with a host of features, although they are priced much lower.

To send a consistent brand message, Volvo has an integrated brand team that is funded by both Ford and Volvo AB internationally. The team is associated in putting together events like the world's toughest sailing race, the Volvo Ocean Race, which is held once in four years.

The race will touch India (Kochi) for the first time this year-end. Typically, Volvo will introduce special edition cars to ride piggyback with the event. Other associations include the acclaimed Volvo Masters Golf tourney and an educational programme that rewards environmental activities, Volvo Adventure, for 13- to 16-year-olds.

The company hopes all this will translate to sales of about 500 cars on Indian roads by year-end. With dealerships in Delhi followed by Chandigarh and Mumbai this month, Volvo hopes to set up at least six more dealerships by end-2008. By then, perhaps, Volvo will stand for cars as much as commercial vehicles.