Volvo Canada president Marc Engelen in front of the auto maker’s new XC90.Jeremy Cato
Volvo is taking digital commerce to a new level among mainstream auto makers by enabling customers to order online a limited number of the company's all-new 2015 XC90 crossover.
A total of 1,927 individually numbered XC90s to be sold in Canada and 29 other countries may only be reserved using a new online interface "that simplifies the process of shopping for, buying and owning a Volvo," says Margareta Mahlstedt, Volvo Canada's vice-president of marketing.
The new digital portal will accept a customer's $4,000 deposit for the $81,500 First Edition XC90. Shoppers will be able to pay with a credit card and also choose the dealer that will complete the transaction and deliver the car. Volvo officials say the interface is easy to use. The online store is to be available as of Sept. 3, at 10 a.m. ET.
To avoid any potential issues with regulators, Volvo Canada will not retain any portion of the deposit. The money goes straight to the dealer. "We're just an enabler of the (purchase) process," Mahlstedt says.
Volvo and other manufacturers clearly see the evolution of car shopping. It is quickly shifting online for all but the completed transaction.
"We have research that shows that by 2020, about 5 per cent of cars will be bought online," Mahlstedt says. "This is a test case. The Special Edition XC90 is at the top of our range. The question is, will customers be willing to buy something at this price point online in the future? These are things that today are unknown."
Volvo globally has spent considerable resources investigating the legal barriers to online vehicle commerce. Mahlstedt says Canadian regulatory issues make it problematic for a national distributor such as Volvo to move to a complete online sales model across the country.
More importantly, Volvo does not want to eliminate dealers. Volvo Canada's 38 retailers, she says, deliver a critical sales and service function that cannot be replaced. This latest online portal being pioneered with the launch of the new XC90 is, Mahlstedt says, a tangible way for Volvo Canada "to help our retailers leverage what's happening in the digital world.
"But we have no interest in eliminating them from the process. This enables our retailers to focus on the human factor – the customer – because part of the 'deal' is done by the time the customer enters the showroom. This helps them get focused on building the relationship, not selling the car."
Volvo's latest effort reflects the power of the Internet to spark wholesale change in how people buy and how dealerships sell cars. J.D. Power's Consumer Retail Experience Study (CRES) found that 61 per cent of new vehicle shoppers arrived in the showroom fully informed. Nearly two-thirds of shoppers know exactly which vehicle they want and nine out of 10 drive away in that ride.
"With most shoppers arriving at the store with their exact vehicle in mind, the research suggests sales people should transition from the traditional approach to sales, toward a more consultative role, focused on product advisory and efficient process facilitation," J.D. Power says in an analyst note.
The age of fully online car sales is not here yet and perhaps it may never come. But Volvo is testing the digital waters in an effort to see how deep consumers are willing to go when shopping for a new car.