Volvo Cars will introduce a direct-to-consumer sales model in the United Kingdom by the end of this year. And the Swedish automaker intends to export the concept to additional markets.
The notion is already causing unease among Volvo’s American dealers.
Former Dyson exec and Volvo’s newly minted CEO, Jim Rowan, said he believes the traditional way of selling big-ticket vehicles through third parties is “flawed.”
“It seems strange for me coming from the consumer electronics and technology industry that you can sell a product which is $40, $50, $60,000 of value to a customer that you never speak to pre-sales and you never speak to post-sales,” Rowan said on an earnings call Thursday, referring to the lack of direct factory-consumer relations.
“That’s a flawed business model, especially in today’s world when we’ve got so much connectivity at our fingertips. We need to be part of that conversation.”
Rowan did not reveal where else Volvo might expand its controversial retail model. But if the auto industry outsider aspires to bring it to the world’s second-largest market, he could be in for a bruising.
Volvo Retail Advisory Board Chairman Ernie Norcross said U.S. franchise laws, meant to protect the dealer network, will prevent a direct consumer model.
“Mr. Rowan is moving head-on to a fight with the dealer network,” Norcross told Automotive News. “We do not feel respected or valued as partners with his comments.”
If Volvo attempts to bring its direct sales model to this side of the Atlantic, it will push U.S. retailers into a “defensive posture,” said Norcross, owner of Volvo Cars Memphis in Tennessee.
Rowan said Volvo’s experience with the controversial retail model in the U.K. will determine how it’s rolled out to other markets.
“We’re going to learn so much,” said Rowan, who took over the top job last year. “It would benefit us to say, ‘OK, let’s see what we learned here, what didn’t work, and how will we change that for the next market?’ ”
