Why Volvo Is My New Favorite Automaker

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Courtesy of volvofinancialservices.com

As I sit here owning a much-beloved VW Touareg and have great respect for all of Bavaria’s expertise in constructing some of the most fantastic cars of all time, this damn company in Scandinavia keeps peaking my interest. It all started the moment I saw the new XC90, and ever since, I’ve been closely following what this company is up to because although they may not have the pomp and fanfare of Tesla, Audi, and others, these sheepish Swedes certainly have a lot going on behind the curtain.

Reason 1: They’re arguably as far if not farther along the path towards an actual autonomous vehicle. By ‘actual’, I mean they actually have a realistic strategy for testing rather than just buying a vacant airstrip and congratulating themselves when the car doesn’t fly off the 20-lane-wide piece of concrete. They’re piloting the cars with actual families around Sweden, which will show Volvo how the cars might actually be used by normal people. Smart.

Reason 2: Their slim but potent product portfolio is the dream of any established automaker, or really even Tesla for that matter. They started with the XC90, the same car that went through an almost-unheard-of 2 full product cycles and still managed to keep sales up. (2 product cycles equals around 14 years of production. The XC90 went into production in 2001 and went virtually unchanged until 2015.) That’s called good design, and if the XC90 and S90 flagships are any indications, Volvo still has an uncanny knack for designing cars so brilliantly that they rarely need updating. Also, because the cars are so tailored to what their customers want, they don’t need to make a huge array of products to satisfy them. Subaru is the poster child for this, and also the poster child for how to make money selling cars for double digit profits.

Reason 3: They accomplished all of this under some of the most outrageous corporate leadership of all time. As alluded to in a previous post, Ford singlehandedly drove a number of brands to the brink of collapse, Volvo included. (Jaguar-Land Rover and Aston Martin are both still recovering.) In 2010, when Ford mercifully handed the abused company over to Geely (a Chinese auto company), Volvo was living on the fumes of the XC90 and their station wagons that had long gone out of style. In comes Hakan Samuelsson, a Scania and MAN truck industry exec, and a powerful team backed by a powerful Geely has become a force to be reckoned with.

Reason 4: Due to their familial ties to China, this positions Volvo for an extremely lucrative future. Few carmakers are having luck tapping into that market, for both cultural and political reasons. On the cultural side, wealthier Chinese are not as flamboyant as they once were. This is good news for the stealthy luxury of Volvos. Politically, being owned (at the moment) by a Chinese-based firm provides huge advantages in being able to operate and sell cars profitably in the heavily-regulated country.

Finally, the real reason I finally dedicated a personal ode to Volvo is that there have been clear signs pointing to an impending IPO in the near future. The company has issued preference shares to institutional investors, has issued quarterly reports for several quarters, and is currently seeking to raise additional capital. This is fantastic news for a well-run company ahead of the game in terms of technology and design, and well positioned to be the Subaru of the mid-to-upper end market for years to come.

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