Volvo Confronts Coming Customer Care Crisis

Ever since the rise of Tesla Motors’ CEO, Elon Musk, and his direct business model and direct way of communicating, competing car makers have struggled to capture the public’s attention as frequently and as successfully. Early on, Musk was matched by colorful CEO’s like FCA’s Sergio Marchionne (since deceased) and Renault-Nissan’s Carlos Ghosn (currently a fugitive from criminal charges).

In their place have arisen Volkswagen’s Herbert Diess (currently touting VW’s upcoming Power Day), General Motors’ Mary Barra (promoting EV’s with Vision Zero talk), Stellantis’ Carlos Tavares (promising disruption and an all electric line up), and Toyota’s Akio Toyoda (warning Apple that the auto business “isn’t easy"). For the past decade, though, a steady, if somewhat smaller bore, voice has emerged from Volvo Car’s Hakan Samuelsson seeking to break through the noise with a clarion call of candor.

Samuelsson’s straight talk express (apologies to former U.S. Presidential candidate John McCain), got off to a rocky start when he told attendees at the 2014 Connected Car Expo at the L.A. Auto Show that Volvo’s mission “is that by 2020 no one will be killed or seriously injured in a Volvo.” Seven years later we know that pledge has yet to be fulfilled.

He followed that up in October of the following year, during a visit to Washington, DC, by releasing a statement that Volvo "will accept full liability whenever one if its cars is in autonomous mode." The driving public has not had the opportunity yet to take Volvo up on this offer as the company has yet to make autonomous vehicles commercially available to consumers.

Last week, Samuelsson declared that Volvo will be an all-electric vehicle company by 2030 and by that time will convert entirely to online sales.  With this statement, Samuelsson is adding sustainability and environmental concerns to his core safety messaging - and putting car dealers on notice that they may be colateral damage from this transition.

Having put the insurance industry on notice by indicating his willingness to take on liability, he is now taking on the entrenched automotive retail community.  It’s a reckless and provocative move, but it reflects Samuelsson’s inclination to tell it like it is.

In a world increasingly shaped by electric vehicles Samuelsson has signaled that he is prepared to lead Volvo through the flames of industry, supply chain, and distribution channel disruption. In the EV-dominated world of the future it will take fewer suppliers, fewer parts, and fewer workers to assemble an EV and it will take fewer dealers to sell and service them – maybe no dealers at all.

Larger competing auto makers tend to bob-and-weave around this topic, refusing to confront it head on.  But as far as Samuelsson is concerned, the writing it on the wall and it’s best to bite the bullet now.

Something else facing drastic change is precisely how that direct sales model and customer engagement is going to work with EVs.  The onset of COVID-19 transformed industry thinking regarding automotive retailing and service delivery.

Dealers had been talking about digital retailing for years, but 2020 marked the moment when these operators got serious as customers hesitated to visit newly re-opened dealerships and even employees were shy of returning to work. The best news for the economy was the return of workers making cars, the return of dealer personnel to sell and service cars, and the return of customers jolting vehicle demand back to life.

The pandemic introduced the concept of touchless sales and service across the industry adding vehicle pickups and drop-offs and car purchasing online or by app.  Samuelsson’s radical vision of dealer-less retail no longer looks quite so radical – but it nevertheless puts a challenge before the automotive industry equal to the company’s liability promise and zero fatality goals.

What will a dealerless future look like in an EV-dominant market.  EVs require less attention from dealers to sell or service, but that engagement is not a nullity.

Tesla has 120 service centers in the U.S. alone, with plans to add 52 in 2021.  While the average Tesla vehicle requires little service or maintenance, the company has had significant recalls and has been dinged for its evolving ability to have vehicles repaired in a timely manner.

Samuelsson has called out the obvious.  Dealers will evolve to vehicle delivery and service operations.  Customers who can order a vehicle via an app will be thrilled to avoid the six-hour arm wrestle that is showroom automotive retailing today.  And the great simplification will begin.

Car options will telescope down to a handful of colors and configurations. Pricing will be predetermined, non-negotiable.  And dealer and OEM brands may become irrelevant.

Car makers will eventually be selling not the driving experience, which will be increasingly uniform in an electrified world, but the experience of vehicle acquisition and replacement – and maybe sharing.  Samuelsson isn’t ready, yet, to proclaim the end of brands – but that is likely his next pronouncement.  It may explain the emergence of Polestar and Lynk&Co. from the automotive experts in Sweden.

Lynk&Co., in particular, arrives with precisely the dealerless strategy proclaimed by Samuelsson and lacking the legacy network that would otherwise resist.  Which is where the customer care crisis arrives.

Dealers are the glue holding together the car maker-customer relationship.  Are car makers really capable of filling that gap?  Having tried Audi’s Silvercar service and seen the rise and fall of GM’s Maven and Daimler’s Car2Go you can color me skeptical.

The onset of EVs is ushering in an industry-wide shift from a B2B orientation of car makers selling cars to dealers to some form of B2C, a la Tesla. Tesla learned the hard way that service hubs integrating vehicle delivery operations were necessary – but perhaps not thousands of them - like there are thousands of car dealers today.

GM is on the cusp of the Samuelsson fulcrum with dozens of Cadillac dealers opting for buyouts rather than take on selling electrified Cadillacs and Chevy dealers experiencing Bolt hesitancy.  Dealers who fail to make the digital or electrification transition may find themselves staring out the plate glass windows of their showrooms at vehicles gathering dust on the lot.  Hakan Samuelsson is trying to tell us all something. We should listen.