GEAR

Volvo Cars isn't shy about experimenting — from vehicle subscriptions to its early pivot to an all-electric future.

While the penchant for pushing the envelope can sometimes spook its retailers, it gives the Swedish niche brand an edge to take on its much larger premium competitors.

"To run a company ... you need to take bold decisions," Volvo Car USA CEO Anders Gustafsson said Thursday during a session at the Automotive News Retail Forum.

"If you have a consensus discussion all the time, you are going to be very slow," Gustafsson told the room of dealers at the gathering, ahead of the NADA Show. "For us to fight with the big Germans .... we need to be fast."

One example of Volvo's move-fast-and-break-things culture is the vehicle subscription program it launched in 2017. While much of the industry has since abandoned the money-losing model, Volvo persevered — and even adapted.

Volvo's subscription model, which bundles the use of a vehicle with insurance and maintenance costs into a monthly payment, ran into a buzz saw of opposition from some dealers. They argued that the manufacturer was violating state franchise laws meant to prohibit manufacturers from competing with their franchisees.

But rather than walk away from the concept, Volvo rolled out version 2.0 of the program that addressed many dealer concerns.

Retailers are not shy about pushing back when needed, Gustafsson acknowledged.

"They can say, 'OK, Anders, one step back — and then we take one step back," the CEO said. "But the day we stop to push this industry into ... something that we think is great, then we are not doing our job."

While the subscription program is a small part of Volvo's business, it is now growing and — more critically — is profitable.

Subscriptions are also drawing new blood to the brand. "It's 85 percent new customers," Gustafsson said.

Last March, Volvo committed globally to become an electric vehicle-only brand by the end of the decade. The automaker proposed upending the retail model by announcing it would move to an online-only, factory-set price sales strategy for its future battery-powered models.

"We started, by far, earlier than anyone else," Gustafsson said about Volvo's early pivot to electrification. "Everyone said that we are stupid — and now everyone is there."

Gustafsson recalled the skepticism he received from dealers when he first laid out Volvo's EV strategy three years ago.

The reaction was, "Mamma mia! This will never work," he told the audience.

But their tune changed after the automaker laid out an ambitious plan to its retailers to deliver five new and redesigned BEVs in the next few years. The models will help retailers double their average store throughput to about 800 vehicles a year by 2025, Volvo told its dealers.

"Two weeks ago, [dealers] were standing up like a Bruce Springsteen concert," Gustafsson said about the dealer meeting in Miami, attended by about 800 retailers from across the Americas.

As the CEO pushes for change, he offered this advice.

"You can never ... force people to believe something," he said. "Sometimes you need to see what you believe, and you believe what you see."

It's OK to say that something will not work, the executive said.

"But," he added, "it's not OK for me to run this operation and not have a solution for the believers and the nonbelievers."