Volvo slashes servicing costs

Volvo has slashed its capped-price servicing costs, but decided against lengthening its warranty from three to five years.

Announced to coincide with the Australian media launch of the new Volvo S60 sedan, the new three-year/45,000km plans start at $1595 for the XC40 small SUV, the new S60 and the soon-to-be-launched V60 wagon.

The fee climbs to $1795 for the XC60 and XC90 petrol SUVs and tops out at $1895 for the XC60, XC90 and V90 Cross Country diesels.

According to Volvo Car Australia, the S60 previously cost $2795 for three years, the V60 $2895, the XC60 $2915 and the XC90 and V90 Cross Country $3030. A six-year service plan is no longer offered.

By comparison, the Mercedes-Benz C-class – a direct competitor for the S60 -- will cost $2000 for three years/75,000km of servicing, if the fee is paid upfront. BMW offers a five-year/80,000km ‘basic package’ for $1565 for the 3 Series.

Back in May carsales.com.au reported VCA’s plans to address servicing costs and at time the XC60’s three-year cost was quoted at $3050 on the official website.

“This plan removes some of the very few objections about our products in this marketplace; that they are expensive to service,” said Volvo Car Australia managing director Nick Connor.

“Our dealers have been happy to support that. They recognise that we have to be competitive. A lot of other brands have very heavily subsidised service plans and what we have now is very competitively priced cars and very competitively priced fixed price servicing.”

Connor said no features had been culled from the new fixed service plans so they could be re-priced.

“We culled our parts margin,” he said. “We haven’t culled the content because the service requirements are the service requirements and they are very comprehensive.

“I think we fit the world’s most expensive pollen filters in our cars.

“It’s about culling our margin and dealers have got a bit of skin in the game in terms of their labour rates as well.”

While Connor was bullish back in May about being a luxury brand leader and moving from a three-year/unlimited km to a five-year warranty, he had clearly cooled on the idea this week.

“It’s something that’s under constant surveillance,” he said. “None of our premium competitors have gone to a five-year warranty so the question is are we a leader or a follower in it?

“I don’t think it will sell us a tonne more cars going to a five-year warranty but if that’s what the market demands then we can react. I am not ruling it out, but not at the moment.”

In a market down 10 per cent, Volvo has bucked the trend and climbed 19.7 per cent in sales so far in 2019.