Despite the fact that one among many Volvo’s competitors closed down their services in the subscription market that did not stop Volvo Officials from keeping insight with the ultimate price of the market and now the company has delivered tremendous results.
The success of the company has created rivalry among automakers to the point that other car companies come up with business models that are totally deviating from the indigenous car ownership. In addition to that, the success has led to unexpected challenges like tension when it comes to negotiating with dealers and orders have depreciated.
The CEO of Volvo Cars, Anders Gustafsson, after seeing the challenges that came up because of the success of the company complemented that growth can be fun; however, it can make things more difficult.
Volvo Company is different from other companies in that, it allows customers to enroll themselves in a service that puts the maintenance costs of the car as well as the insurance cost all in a single payment. In addition to that, the payment became user-friendly. It was $650 to $850 on a monthly basis depending on the vehicle. In addition to that, customers sign an agreement that last two years stating that they can swap for a new vehicle after a single year. This offer emerged after they launched the company’s new XC40 crossover as its signature vehicle.
In addition to that, the number of subscriptions sold by Volvo was extremely many than expected and the number of waitlist stretches even to the next year. This has made the demand curve of the company to increase at an enormous rate. The CEO confirmed that the sale of traditional vehicles was lucrative despite the fact that other companies felt insecure in taking part in the business. The other companies were afraid that Volvo company was reaping them off but the CEO made it clear that the customers were to decide what they wanted and not vice versa.
It is evident that Volvo’s company was successful as it allowed swapping of new vehicles once per year, which is a great move as it, minimizes cost on both sides.