Q&A: Getting to grips with how to manage a niche vehicle brand in SA
Greg Maruszewski was appointed MD of Volvo Car SA in 2015, after serving as MD of Volvo’s operations in Turkey, Central and Eastern Europe, and the Middle East.
He was born in Poland but emigrated to SA with his parents at age 10. He has a BCom and started his career in the finance industry before moving into the automotive world.
He speaks to Denis Droppa about the highlights and challenges of managing a niche car brand in SA.
What is the state of play at Volvo Car SA compared to when you joined in 2015, and how do sales compare?
The company is fundamentally different. Not to slate the previous teams, but a lot of it was also because Volvo head office was not paying so much attention to SA. We grew from an all-time low of 2.9% in 2015 to just below 6% of the segment last year, and it should have been higher had it not been for a worldwide shortage of XC40 supply. If you look at our DSI (Dealer Satisfaction Index) we went from a bronze rating in 2015 to gold for the last three years in a row.
A renaissance in Volvo’s product range has seen award-winning new cars like the XC90, XC60 and XC40 attracting more buyers to the brand. On top of this, what changes have you made to the local operation?
We’ve reduced the headcount as we were drastically overstaffed. We’ve also empowered people by introducing more responsibility and accountability, giving people ownership of the operation. That was the big change internally.
With the dealers, we’ve focused a lot on customer satisfaction, which is coming through in our results and had a positive impact on our sales. The product has also been good to us, there’s no denying that, and made our volumes grow.
We’ve also introduced offerings like a guaranteed buyback, which we previously didn’t have.
The introduction of insurance has helped too, as it kicked the total cost of ownership down. We’ve been able to negotiate some very good rates; not only because of the profile of the traditional Volvo driver, but also because of the safety features in our cars.
How different is SA’s automotive industry compared to where you’ve worked before?
It’s the toughest market I’ve worked in. The industry isn’t that different but the difficulty is with the current economic climate where the total passenger car market, and particularly the premium segment, is under pressure.
What are the main challenges of operating a relatively niche brand locally?
In the other markets I’ve worked in, Volvo has had a higher market share, in some cases more than 20% of the segment. We’re the underdogs in SA, with a much smaller share. We’re up against the strength of the three German brands (VW/Audi, Mercedes-Benz and BMW), which all have local operations and earn export credits. Our costs are higher but the selling price is determined by the competitors, so it squeezes our margins.
Being a smaller brand, when it comes to marketing you have to break through the clutter. By the time we’ve broken through the clutter our budget is out, so we have to be smart with the way we spend our budget.
What have been the highlights and lowlights of your tenure here?
I wouldn’t say there are any lowlights. I quite enjoy the challenge of the market.
As for highlights, I like it when things come together, like the segment share growing every year. This is the longest market I’ve been in; almost five years, and I’m still enjoying it.
With high safety becoming a standard in most modern cars, what does Volvo offer today that other brands don’t?
Safety is standard in most cars but it’s also how you engineer the safety features into the cars. We use real-life crash data to incorporate safety elements into our cars, so they’re undoubtedly still the safest cars in the world.
Secondly, we use a lot of features that are not a distraction but an aid. The driver aids that we’ve put in, like Pilot Assist, help avoid collisions, but at the same time make the driver’s life easier by keeping the car in the lane. It takes a lot of stress out of driving.
Does Volvo appeal to younger buyers than before?
I would say so. The design definitely appeals to younger buyers. It started with the XC90 and XC60, and the XC40 is seen as a “cooler” car that has brought new, younger customers into the brand.
Modern Volvos all use compact but powerful 2l four-cylinder turbo engines. Do you get customers asking for more “emotive” larger-capacity engines?
Yes, and in SA more so than in other markets. I had one particular customer who said he couldn’t get more than the “2-litre thing”, but I told him to go and drive it, and once he did he took everything back.
The initial reaction might be that the engines are too small, but we focus a lot on giving out cars for test drives. Once you drive it, all the perception of the bigger-capacity car changes.
How do Volvo resale values rate against the competition?
We are on par with our competitors; we’re all within 1% to 1.5% of each other. I know there’s a perception that Volvos have poorer resale value and that was one of our key focus areas when I came here in 2015. That was one of the reasons we introduced the guaranteed future value product. It’s been a very good selling tool.
Tell me about Volvo’s plans, both globally and in SA.
Globally the move is towards electrification and all newly introduced Volvos will be either hybrids or fully electric vehicles.
We’re also working towards autonomous driving, but it will take longer than predicted because everybody underestimated the complexity of a car driving itself — particularly the external factors [other cars, pedestrians, and so on].
We’re not going to get the new S60 sedan, not soon anyway, as that segment is shrinking at 25% per year. Our focus will be on our SUV range for the time being.
Volvo Cars SA has increased its market share in the premium-car segment and last year you said you’d have sold even more cars if there wasn’t a worldwide shortage of XC40s. Up until the coronavirus hit, was there still a shortage?
If you take coronavirus out of it, we were going to be OK with supplies. With the virus, the European factories have stopped operating but we still have enough cars until the end of May, given normal trading patterns.
How hard is the coronavirus lockdown hitting Volvo Cars SA, and how are you coping with the situation?
We were in lockdown and working from home two weeks before the rest of SA. I’m quite impressed with the productivity. I was expecting people to treat it as a holiday but we’re seeing a lot of online discussion and you get answers a lot quicker.
It’s been a big eye-opener of what the potential is without having a big office structure. It might be something to think about.