Volvo changes its strategy to reel in young customers
Abdul Khalik, The Jakarta Post, Jakarta
Volvo launched a cheaper model here on Thursday in what appears to be a change of strategy in the company's efforts to penetrate the already tight domestic premium car market.
The Swedish automotive giant, whose limousines have been used as the official cars of Indonesian Cabinet ministers for many years, expects its new S60 sedan will prove attractive to the country's brand-conscious young business executives.
"We hope the S60 type can be used by young executives who enjoy driving, appreciate quality and also recognize good value. This is a very attractive offer compared to other, similar class brands, such as the BMW 3-series or Mercedes C-type, because we offer more for less money," said Ross Higgins, Volvo's Indonesian brand director.
The new car, equipped with a 5-cylinder turbocharged engine and an automatic transmission, will be sold for Rp 375 million (about US$44,642, off the road). Volvos are usually sold for between Rp 500 million and Rp 850 million.
He said that currently the BMW 320 series, which had a price tag of around Rp 526 million, was no match for the cheaper Volvo S60 because the latter had more horsepower and a better equipped interior.
"We must catch up with our competitor's better image by offering more. Because we left the Indonesian market after the crisis erupted in 1998, we simply have to fight from behind," said Ross.
Volvo has also introduced a more luxurious model, called the S80 type, which is on offer for Rp 530 million (off the road).
But Ross hoped that the S60 model would be the main driver in increasing Volvo car sales in Indonesia to around 400 units this year compared to the 360 units sold last year.
"We are optimistic about the current condition in Indonesia this year although there will be elections. We believe we can achieve our target because learning from past experiences, we are convinced the Indonesian market is very resilient to sudden shocks," he said.
Other industry players have also predicted higher car sales this year despite the elections, with sales projected to grow to between 375,000 and 385,000 units, compared to the 354,331 units sold last year.
But competition in the small premium car market will be much tougher as other players like BMW and Mercedes Benz are also introducing new models. Even Japanese giants like Toyota and Honda are also eying a slice of the premium market.
With the current level of sales, Volvo is number three after BMW and Mercedes in Indonesia. BMW still holds the biggest market share with 46.8 percent of the total 4,315 cars sold last year while Mercedes has a 30 percent market share.