Volvo Moves Towards Online Vehicle Sales

For much of 2014, dealer groups ran into issues with Tesla motors on a state-by-state level. The main reason was their desire to sell vehicles directly to consumers without the use of a dealership as the intermediary who works with customers. Now it seems that Volvo may be headed down the path to selling their vehicles online.

A report by USA Today indicates Volvo has started a program offering consumers the opportunity to initiate a vehicle purchase from the manufacturer. Does this mean Volvo is going to sell direct-to-consumers and cut out their dealers? It does not. Right now on Volvo.com, you can submit an order for an XC90. Consumers are able to customize the ride that they want and then have the chance to leave a $3,000 security deposit. However, the next step in the process is to contact a local dealer to facilitate the eventual transaction. This differs greatly from a direct-to-consumer sales model.

USA Today also reported that after the consumer as agreed to purchase the XC90 and put down a deposit, a dealer contacts them. If the consumer and dealer don’t agree upon the delivery date, price or particulars after the deposit for the vehicle has been put down, the opportunity is then given for the customer to back out of the sale entirely. The idea is supposed to benefit Volvo and their dealers. For digitally minded consumers, they may like to initiate a vehicle purchase online, and for dealers, they are still a big part of the purchase process.

This online shopping initiative by Volvo has been compared with GM’s Shop-Click-Drive. A pilot version of GM’s online-initiated sales resulted in 15,000 direct sales and 110,000 leads for dealerships. According to USA Today, it’s an initiative that reportedly had lead conversion rates of around 30%. Certainly those high conversion stats could lead more automakers or dealers, to investigate online options for their customers.

One of those dealers that found success with the Shop-Click-Drive program is Covert Chevy Buick GMC in Bastrop, Texas. Rick Bowles, the Internet Director for Covert, told USA Today the program has worked well as it allows customers to figure out the entire purchase process online. Bowles said their digital option is based on improving the customer experience. Bowles said, “So many people have the fear of going into a dealership because of negative past experiences, the back-and-forth, ‘Let me go check with my manager’ experiences that make it hard to buy a car.” The store in Bastrop allows customers to find a vehicle, arrange financing and even have it delivered to their doorstep if they don’t wish to come to the dealership. The customers are able to refuse the vehicle one it arrives; however Bowles indicated that cancellations post delivery are few and far between.

This new direction for Volvo is part of a larger decision to do more online and less at auto shows. The automaker is reportedly going to only attend three auto shows in 2015 as they focus on revamping their digital presence. This includes both their website and social media. Alan Visser, Senior Vice President of Marketing, Sales and Customer Service at Volvo cars doesn’t sound enamored by auto shows. Visser told the Wall Street Journal, “Motor shows are a rather traditional affair in which brands crowd out each other at set times in the battle for press exposure.”

Reports indicate that Volvo will use their own events for launching new vehicles in 2015 in lieu of the auto show circuit. It seems that Volvo is content to invest in its digital spotlight now, even if it means being out of the physical spotlight in 2015. From a dealer perspective, do you like the programs by GM and Volvo? Do you think that they are effective? Do you think that online sales initiatives should be an OEM or dealer decision?