GFC hinders Volvo sales

Prestige importer Volvo could have sold more XC60s in Australia last year, but the factory wouldn't run a third shift during the depths of the Global Financial Crisis. That might have been short-sighted, since the XC60 is proving itself the most popular Volvo in Australia -- and the world.

Last year it was outsold locally by the larger XC90. Sales fell short in the lead-in to the release of the upgraded XC60 range during the third quarter. Volvo's runout of the old model was highly successful, but supply was further hampered at the time by the factory reducing production of the new SUV during the Global Financial Crisis, according to Volvo Australia MD Alan Desselss.

"Locally, we've had a big shortage of XC60 production," he told journalists earlier this week, "Like everybody, we reacted to the Global Financial Crisis. Now, we're almost regretting it, because we had a shortage of XC60 stock..."

Sales positions have changed this year, with the XC60 now outselling the XC90, but the telling thing for the Swedish brand in Australia is the strength of sales for all three SUVs in the local product range, including the XC70.

The XC60 alone has outsold all Volvo's local range of conventional sedans and wagons combined by nearly 200 units for the year so far. Only the addition of sales for the C30 and C70 would tip the balance in favour of the conventional passenger cars. Even the larger -- and more expensive -- XC90 is outselling the PVs (again, excluding C30 and C70).

As BMW has found with its X5, Australians love their prestige SUVs. Uniquely, Australians buy more X5s than 5 Series. There's an analogue applicable in Volvo's case too.

"XC60 is our number one," says Desselss. "And it is actually the number one, worldwide... then followed for us by the XC90, which is slightly out of step with the rest of the world... V50 and V70 are a lot stronger in other parts of the world."

But if there's a danger that Volvo is becoming a bespoke importer of SUVs, Desselss is not saying as much. In fact, the next generation S60, due here around the end of this year, should further bolster sales for the brand and, Desselss hopes, should tip the company's 2010 tally over the 5000-unit threshold.

The Volvo MD reckons that the S60 will not only sell up a storm in its own right, but could bring in new customers for the brand -- as the C30 has done (65 per cent of buyers of the small hatch are new to Volvo) -- as well as channelling prospects into other Volvo models, as the XC60 has done for the XC90.

The S60 (and the V60 to follow, presumably) could do for the conventional passenger cars in the range what the XC60 has done for the SUVs, Desselss suggests. Buyers arriving at a Volvo dealership expecting to fit the entire family and all the detritus of life in an XC60 can be diverted into the larger XC90 if the former is too small, says the Volvo boss. So, far from the XC60 cannibalising XC90 sales, the smaller SUV is a supporting act for the larger one. In year to date sales, the XC90 has sold just 10 units fewer than for the same time last year (342 vs. 352).

Volvo's new-found style and its soft landing in the arms of Geely has left the Australian arm with a positive outlook for the future -- and customers appear to be responding to that.

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