Interview with Sudeep Narayan

Volvo Auto India (VAI) established its presence in India in 2007 and has since then worked intensively to market the Swedish brand in this country. With a corporate office in Gurgaon, Volvo Auto India opened its first dealership in March 2008 and currently markets its products through outlets in New Delhi, Mumbai, Chandigarh, Coimbatore, Hyderabad, Chennai, Kochi and Pune. The Indian arm of the Sweden based firm company currently sells four premium models as completely built units. While the luxury SUV XC90 & the luxury sedan S80 are imported from the Sweden plant, the compact luxury SUV XC60 & the premium sedan S60 which are imported from the Belgium plant.

Before you joined Volvo Auto India in 2008, you were with GM India. From a mass brand to a class brand, what’s the experience been for you?

The journey has been very good for me.  At Volvo, we have grown from 100 cars per annum to close to 800 annum by the end of this year. So it has been a very steep growth for the Swedish luxury brand in India especially when there is so much competition. But what the brand inspires professionals to do is to get the best out of everything. This is because Volvo is completely differentiated and distinguished from rest of the luxury brands, not just in India but also globally. If you look at the way we style our cars and the safety technology that we equip them with, we are the first company in India that has Laser automated braking system which is very relevant to bumper-to-bumper traffic.  That inspires a marketing person like me to do good things for the brand.

Volvo Auto India initially started with a few volumes. But of late, the company has seen an unprecedented boom. So what have been the primary reasons for the sales jump? Is it because people are gradually becoming familiar with the Swedish brand? Or is it because you have now got in the right products?

Well, we always had very good products. The jump in sales is primarily because we have actively started marketing them. Until 2011, we were looking at ways to lay the foundation that involves putting a good service team. So whatever a few 100 cars that we sold, we ensured that those customers should be happy. Once we have passed that gate, we move to attract newer customers who are not very familiar with Volvo. Now we have incorporated fuel-efficient D3 engines in our portfolio at competitive price points. So that has attracted a newer target group. This is coupled by the fact that we started with S80 and XC90 and now we have S60 and XC60. So it’s a bit of both of the strategies i.e. marketing and new launches.

How has the luxury car segment evolved in India?

If I were to say about the luxury car segment in India 8 years back, it was hardly anything. Today, in the larger scheme of things it is not more than 1-2pc of the total car market. So the size of the market is still very small. Having said that, this segment has witnessed an unprecented jump in CAGR for the last few years (2009-11,000 units, 2010-16,000 units, 2011-23,000 units) and is poised to touch 30,000 units during this calendar year. So there is a lot of space for luxury scars to grow into the better set of automobiles sold in India.

Volvo had chalked out an aggressive investment worth `15 crore this year for marketing activities. Could you shed some light on that? And what amount have you earmarked for similar activities next year?

We don’t have a fixed percentage for any specific advertisement medium like mainline, direct marketing or events. We don’t apply such a formula. I personally believe marketing is ‘Creativity’. It is basically the need of the hour. So whenever there are shopping festivals, we do car displays in malls. Whenever there is IPL happening, we do outdoor activities around the stadium at that point of time. So there is not set principle that I have earmarked an ‘X’ budget for a ‘Y’ activity or ‘A’ budget to ‘B’ activity.  It is always the new flavour that we need to capture in terms of marketing, brand building, etc. This year, we launched two new properties one is the Volvo Golf Challenge is our global amateur golf tournament which is being done in 6 cities with the final in Amby Valley.  The two winners from the national final will win an invitation to compete in the World Final in South Africa of the ‘Volvo World Golf Challenge’ next January. And that World Finals will be with professionals (pro-tour). So that is the uniqueness that ‘Volvo World Golf Challenge which no other car brand brings. The tournament has been accepted very well. We are actually humbled by the responses that we have got.  Even going forward, we will try to build on these activities for next year. But some strategies that work in 2012 may not work in 2013 or so. So one has to be very dynamic when doing these kinds of things. During the next calendar, the there will be an increase in the budget.

As part of its marketing strategy, you were the “Official Car Partner” for the Lakme Fashion Week (LFW) with Fashion Diva Ritu Beri showcasing designs called “Icons of Luxury” that have stemmed out of a common philosophy of “Designed around You”.  How has this entire synergy worked for you in terms of building the company’s brand equity?

We got into fashion because of our global philosophy of ‘Designed around You’. So the Volvo car, which is very fashionable, is actually designed around people whether it is design, safety, comfort, environment etc. It‘s about making a life less complicated. So a Volvo car is very warm from inside, but cool from the outside.  That is what the crux of the brand is. So today, the component of design, styling, etc. has grown exponentially in our philosophy.  That is what we call a ‘modern Scandinavian design’. Coming back to our association with Ritu Beri, Volvo as an international brand will obviously seek partnership with brand friends who are again global who are very well know in their spheres of expertise.  So Ritu Beri was the first Fashion Diva from India who predominantly does fashion shows in Paris now. So she has that international appeal, lineage and also clientage. That’s what got us together and we both decided to showcase designs called ‘Icons of Luxury’.

Besides golf, what are the other ways you will be engaging with your target audience?

We are looking at launching a new engagement property next year which will be focusing more on the showcase of our SUVs. We have not named this property, but it will be like an experiential programme.

Volvo is known to focus more on out-of-home sourcing and on-ground events than television commercials. Is there any particular reason behind it?

It’s a very tough question to answer. I can’t say that television is not important. But at this juncture, for a television medium a brand must have a footprint all over India. That is something we are actively working on. There are some key cities where we are not present in. We are looking at dealerships in various cities and by the end of this year we will have 3 more outlets in new cities.

And when it comes to brand promotion, are you not betting big on the digital space?

Yes and No. I was working for a brand which was amongst the first in marketing and pioneered in the digital space (in India). When I was there, I started the whole concept about allocating a specific budget on the non-traditional medium without expecting anything in return. When we did that, the company got good results. Then we learnt the whole process. But in Volvo, we are not positioning ourselves as a mainstream brand. So as a luxury brand, we see this space more as a talking tool than a selling tool.  With due respect to the internet users, not many of them who click on online ads have immediate plans snap up our products.  Unlike mainline communication, we really don’t know who our prospective customers are. We also purposely mention the prices of our products on the advert so that our customers are able to decide before making a enquiry call at our dealer’s end.

What is your sales target for this year? And next year, what would be the numbers that you would be looking at?

We are looking at selling 800 units this year as compared to 326 units in the same period last year. Next year, we are looking at a healthy double digit growth from what we are today. This will be underpinned by our enhanced distribution network and new rollouts. However, all models will be sticking to the Completely Built Unit (CBU) route. 

You have gone on record saying that Volvo will be launching a new model every year consecutively for the next five years. And next year, you have lined up V40 Cross Country Crossover.  What are your expectations from this model? What will be its price range? Will it be a gamechanger for the company?

Yes, you are right. But I don’t know whether I should call the V40 a gamechanger. Because there are a different ways at looking at a gamechanger like volumes, profits, etc. So a gamechanger in our parlance is not a volume but more financial health. If you compare our products with our competitors’ CKD models, the prices that we offer (on CBU models) are actually better. If you look at the history of pricing in India, no competitor has got the price down after assembling their products.  They have introduced low-end variants at cheaper prices.  As far as the V40 is concerned, it will be priced very competitively even after sticking to the CBU route. It will be somewhere in the price bracket of BMW X1 to Mercedes B-Class. I don’t know what will its volumes be, but I a confident that it will be a good brand shaper because that’s the latest offering from Volvo globally. So everything from styling, comfort, safety, etc, will be class-leading.  Even though it will be a small car, it will be packed with a lot of luxury features.  There is an option of putting a fully-integrated glassroof, TFT Instrumentation Panel et al. These are fitments which are not available in an entry-level luxury segment car. So what we will put for India and how we will configure it is something we are currently looking into.

Like your rivals, are you also of the view that associating with motorsports activities like F1 can give a major fillip to the brand? If yes, what are you doing on that front?

There are so many automotive brands that are into F1 and yet not selling cars. Even if they do, not all of them are successful. Some of the successful brands are actually not in F1. So F1 is a different level of motorsports which has a different aura and imagery. But it doesn’t mean if you are not in F1, you will not be successful.  There are different ways of enhancing our brand equity. If F1 was the only brand shaper, then there won’t be 24 players vying for the championship title and there won’t be 12 teams on the grid.  If F1 was the only way to showcase one’s technological prowess, then there could have been 120 teams on the grid.  Moreover, a couple of brands have pulled out too. So buying a car and being into motorsports are two different ballgames. Globally, we are also into motorsports in a different way. We are a participant of the World Touring Car Championship (WTCC), which is an international Touring Car Championship sanctioned by the Fédération Internationale de l’Automobile (FIA). Those are very region-specific events. Our endeavour is actually to showcase more on the safety and the environment rather than speed, thrills, etc. This is because at the end of the day, what our customers end up buying is miles away from what the F1 car has. And as far as hosting any activities on the BIC is concerned, I am not so sure about it. I want to give or show people what they buy and not something like a racecar which is not sellable.

Luxury carmakers are now seeing record demand from small cities of India. Don’t you think you are missing a golden opportunity at a time when your German rivals are expanding your distribution base?

Like I mentioned earlier, we are too expanding our distribution base. I don’t actually see a rivalry with the German brands but within them. This is because our brand is very different from them. The kind of people that we attract is perhaps slightly different from the one our competitors attract at this point of time. And we want to do things in a different way to attract that kind of an audience. Thenceforth, we aim to make more and more people distinguished decision makers of purchase. This is enabling us to work in a slightly different cocoon following the ‘Blue Ocean Strategy’. We are therefore not bogged down by our total volumes.

Do you think a brand ambassador will enhance the popularity of the Volvo brand?

Globally, we have roped in brand ambassadors only in China and the US.  In India, we are already having our 1,000 happy brand ambassadors i.e. our customers. In India, it will be very expensive to get endorsed by someone when the numbers are not that huge. So once the there is a cost equation, we might consider it. But what we prefer doing is having brand friends.

Lastly, what is your vision for the company when it comes to marketing and PR activities?

We would like to do things in a very innovative way. Like the way we have embellished our office reception in Gurgaon. In the automotive sphere, we were the first ones to come up with Ipad applications (in Oct’10). We have been the pioneers in executing innovative strategies like the Golf Tournament. The trophy christened ‘Blue Lotus’ was not made by us but by a renowned Indian glass artist.  So the vision we have for the Volvo is that we want to make it a very progressive and desired luxury brand in the market by 2020. That could mean in numbers, but it should mean more on the equity front. Once you attain the equity, the numbers will definitely follow. It’s not necessary that a big jeweller is richer than a small grocerer. Even a small grocer can have a better cash flow and a higher income with a better margin than a big jeweller. So it all depends on what you are looking at. At the same time, we are offering the right price tag to our customers without resorting to any discounting tactics.