Volvo aims to help its U.S. dealerships become more profitable in 2018 in part by focusing on improving the used-vehicle and service businesses.
With the most updated product portfolio in the brand's history, "it's time to deliver" on profitability gains, Volvo Car USA CEO Anders Gustafsson said after the brand's make meeting at the NADA Show. "Our retailers need to make more money."
Overall dealership profitability is expected to increase in 2018 vs. last year, Gustafsson said, though he declined to give a percentage. If dealership profits don't improve, "they need to throw me out," he said.
Volvo will increase its spending on marketing in 2018 to support the updated product. More resources will go into promoting used-vehicle sales and service, and toward improving dealership training, he said.
"Used cars and customer service is our medicine," Gustafsson said. "We, Volvo, need to do a better job. We need to support our retailers to get even better on used cars and customer service."
There won't be growth or sales targets and corresponding bonuses established in those areas, he said.
"This is common sense. All of us in this industry know that those two focus areas are the most important profit drivers for our retailers," Gustafsson said. "So our job is to help them and promote them."
The major message received by dealers: Volvo needs us, said Matthew Haiken, chairman of the Volvo Retail Advisory Board and general manager of Prestige Volvo in East Hanover, N.J.
"It's refreshing to hear because a lot of dealers feel this stuff like subscription is a Trojan horse that people want to come and overcome franchise laws," Haiken said. "That's not the case at all. They made it clear that they need us."
Volvo's subscription service, available for the new XC40, has 1,000 orders so far, Haiken said. The XC40 arrives at dealerships this month.
Volvo and its dealers will also work on ideas to cut expenses this year, Haiken said. One focus will be controlling inventories and floorplanning costs.
"With interest rate increases, it's something that's on our radar, and we've got to talk about it," he said.
