19 May 2023

Volvo will switch all new car sales to a direct model in June, in a move first revealed by Auto Retail Agenda in March 2021.

The Swedish brands move follows premium rival Mercedes which started operating under an agency agreement at the start of the year with mixed results.

Volvo does not use the word ‘agency’ to describe its direct sales model but does describe it as having “transparent and national online pricing without haggling”. Volvo will also fund the cost of new car stock. The car maker has also not given an exact date in June for the ending of franchise agreements and the start of direct sales.

Under the new network agreements Volvo retailer will still handle trade-ins and will still be able to sell add-ons such as GAP on some of the finance products offered.

The change is part of a global move by the Chinese-owned car maker.

Kristian Elvefors, managing director, Volvo Car UK

A statement by Volvo said: “Apart from simplifying our offer and introducing more transparent pricing, we’re also investing in a centralised digital inventory system that will allow us to see all cars that are available across the country at any given time. That allows us to locate and deliver cars faster.”

Commenting on the ending of the franchise system for the Volvo retailer network, Kristian Elvefors, Volvo Car UK managing director, said: “Evolving consumer needs are the driving force behind this change. We want to provide the best possible experience for our consumers, whatever their buying preferences. The transformation is being undertaken in close collaboration with our retailer partners and we are confident it will deliver an industry-leading buying process.

“It’s exciting to see the progress we’ve already made as we transition our business and continue the roll out of this new sales model. So far this year, 17% of our sales have been online and direct, and they continue to grow as we move towards the completion of this transformation.”

A Volvo spokesman added: “In the United Kingdom the change is already well under way, with many direct sales channels already operational. Since 2019, it has been possible to order a Volvo car online in the UK. The subsequent launch of the Care by Volvo subscription service in September 2020 offered a new, flexible alternative to traditional car ownership. To date, more than 12,000 new cars have been sold by this direct channel.

“In early 2022 we were the first manufacturer in the UK to launch an online direct sales platform for approved-used cars. We then provided a new solution for Fleet and Business consumers with a tool for SMEs to order and manage their company cars directly with us online.

“In June this year we’ll be taking the next important step as the UK becomes our first 100% direct market when we close the UK wholesale channel. It is important to note that we are not closing the Volvo Cars retailers. They continue to be an important part of a seamless online and physical consumer experience. Sweden will be the next market to switch to this model, while other markets in Europe will follow as they become ready.”

READ: Auto Retail Agenda’s brand-by-brand guide to agency agreements

Tags: agency, Volvo