Why Volvo Can’t Win in the American Market

By Douglas A. McIntyre Published Jun 10, 6:38AM EDT

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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.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.