Volvo wants to reclaim some of the position it had as the safest car sold in America, a quirky family of vehicles that appealed to a relatively modest niche of drivers. Volvo’s series of financial problems held back any further advance against a slew of competitors. Volvo’s primary trouble is that the number of competitors has grown and will not yield to a weaker rival.
The newest car Volvo offers, the S60 T6 Drive-E, has gotten generally good reviews. However, praise for its fuel efficiency, acceleration and safety features almost certainly cannot overcome the fact that most evaluations of the car cannot help but mention its competitors. Among these are vehicles for German giants Audi (part of Volkswagen), Mercedes and BMW.
Volvo’s monthly sales rate in the United States hovers below 5,000 most months. BMW and Mercedes sales tend to run over 25,000 monthly, and Audi sold 15,000 vehicles in May, up 25%. Some of Volvo’s competition comes from domestic brands, which likely include General Motors Co.’s (NYSE: GM) Cadillac.
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Beyond the marketing muscle and powerful brand names of Volvo’s rivals, it contends with the perception it cannot make good cars. In the 2014 J.D. Power U.S. Vehicle Dependability Study, Volvo ranked well below average. Brands ahead of it in the measure included Lexus, Cadillac, BMW, Mercedes, Infiniti and Audi. To the extent buyers rely on research to make buying decisions, Volvo has a disadvantage.
Volvo’s range of vehicles includes cars, wagons and SUVs, with base prices between $33,000 and $40,000. Its rivals match this lineup vehicle by vehicle, which gives the company and its dealers no breathing room.
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Because the American car and light truck market continues to grow at an impressive pace, manufacturers have become unusually aggressive as they drive to outgrow their competitors. It is no place for small brands without any significant advantages. And that is the best way to describe Volvo.
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