Volvo is supposed to be a potent luxury car rival in the United States to Mercedes, BMW and Lexus, which are the market leaders. Its July sales show it is far short of that goal. Sales are actually crumbling. In July, U.S. sales dropped 18.8% to 6,967.
July is one of a string of disappointing months for the brand, which is owned by China’s car giant Geely. Volvo represents an early effort by a Chinese company to make inroads into the American market. The attempt’s failure also shows up in Volvo’s sales for the first seven months of the year, with units down 9.2% to 41,072. Even Ford Motor Co.’s (NYSE: F) troubled Lincoln brand has done much better, with sales up 4.5% to 65,212.
Sales of Volvo’s flagship, the All-New XC60, dropped 12.7% to 2,521 in July and are down 23% to 14,552. It is Volvo’s best-selling vehicle in the United States. Volvo has put its limited marketing muscle into the SUV, and its struggles show just how deep its troubles in America run.
One of Volvo’s issues is that, based on prominent research, people do not like its cars as much as those built by BMW, Audi, Mercedes, Lincoln, Cadillac, Jaguar and Lexus. All got better grades in the widely followed J.D. Power 2017 U.S. Automotive Performance, Execution and Layout (APEAL) Study. The research firm described the factors that went into its grading:
The 2017 U.S. Automotive Performance, Execution and Layout (APEAL) Study measures owners’ emotional attachment and level of excitement across 77 attributes, ranging from the power they feel when they step on the gas to the sense of comfort and luxury they feel when climbing into the driver’s seat.
J.D. Power queried 70,000 people to collect data for its conclusions.
Volvo is also hamstrung by a limited model line, particularly compared to the top-selling Japanese luxury brand Lexus, owned by Toyota Motor Corp. (NYSE: TM), and the Big Three German car companies — Mercedes, BMW and Audi.
Volvo’s reentry into the American market is a failure so far. It probably does not have the model line or brand strength to change that.
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