Volvo is not recognized as an independent branding problem in China

A bankrupt luxury car company was rescued by a Chinese auto brand car company. This is obviously a miracle. But this is true.

As the saying goes, “It's good to get a cool back with a big tree,” but Volvo Car Company didn’t rely on the Ford’s big tree. When Volvo Car Corporation was affiliated with Ford Motors, it faced losses for four consecutive years. In 2006, 2007, 2008, and 2009, Volvo Car Corporation lost a total of US$39 million, US$164 million, US$1.465 billion and US$653 million, respectively.

In 2010, Volvo Car Corporation suddenly transited. Its turnover was 113 billion Swedish kronor (about 17.9 billion U.S. dollars), an increase of 15% over the previous year, and a profit of 320 million U.S. dollars (about 2.34 billion kronor). At the same time, Volvo Car Sales soared by 11.6% to 374,000 vehicles. In the first half of 2011, Volvo’s car operating profit reached SEK 1.2 billion.

All this happened after Volvo Car Corporation was acquired by Geely Automobile Group. In August 2010, Geely Automobile Group and Ford Motor Co., Ltd. completed 100% property rights delivery of Volvo Car Corporation in London, England. At this point, the identity of Volvo Car Corporation has changed from a foreign luxury car brand to an internationally owned brand owned by the Chinese.

What makes Volvo Car Corporation reborn quickly? Shen Hui attributed this to a clear and responsible system of rights. Li Shufu called it "Geely is Geely, Volvo is Volvo." Geely Automobile Group regards Volvo as a tiger and has set a target for the task, and let it go by Volvo Car Company. Not doing well, Volvo Car Company needs to take responsibility.

When Volvo Car Corporation presented a high-growth examination paper, the regrets and growing troubles immediately followed. In an interview with reporters, Geely Automobile executives responded to this.

The shortcoming is: high global sales growth, China's first-half performance has not yet reached expectations. Li Shufu admitted frankly that this year plans to complete sales of 60,000 vehicles, but only 21,000 vehicles were completed in the first half of the year. Shen Hui, who is responsible for the Chinese business, said that this is mainly limited by capacity. “There is not enough production capacity at home and abroad. Overseas, under the influence of factors such as the layoffs of Ford Motors in the past few years, the vehicle production capacity was insufficient. China's foundry partner is Changan Ford Mazda, and its capacity shortage has affected Volvo’s domestic production volume.” It was also learned that even The Changan Ford Mazda OEM is also subject to supply of overseas spare parts, because 99.7% of the parts need to be imported from overseas. In order to solve the problem that China's sales are less than overseas glory, Volvo Car Company hopes to accelerate the pace of localization.

The most obvious growing pains are cultural collisions. In the case of a sponsorship of nearly 2 billion yuan, Li Shufu initially felt very distressed. For Chinese companies that are simple and thrifty, it would be better to advertise marketing directly than it is to sponsor a regatta with 2 billion yuan. But in the end, Geely Automobile Group, represented by Li Shufu, chose to respect Volvo’s cultural traditions. Similar collisions and frictions are many, and Shen Hui does not think it is difficult to overcome. “The Geely Group and the Volvo Car Company are an interest community. As long as it is beneficial to Volvo Car Company, it will benefit Geely Group and benefit the Chinese auto industry.” Li Shufu said More straightforwardly, "We are a subcutaneous fusion, and the joint venture is a fusion of two subcutaneouss."

In addition, Volvo cars need to face the "not recognized as an independent brand" problem, which will affect its ability to successfully enter the official car procurement system. Shen Hui said, "According to the law, Geely Automobile Group has absolutely controlled the Volvo Car Company and the Volvo Car has become its own brand." In the face of an average annual growth of 10 billion yuan, China's official car procurement market is expected to reach 100 billion yuan in the future, Volvo Car Corporation has already started operations. It is understood that Volvo sedan has become a local official car procurement system in Daqing and Chengdu, and has become one of the automobile brands that the Ministry of Foreign Affairs purchases globally.