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Volvo Cars of North America, LLC Issue Date: 1/1/03 Revision Date:9/11/2015 World Congress January 14, 2003 Victor Doolan President and CEO Volvo Cars.

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Presentation on theme: "Volvo Cars of North America, LLC Issue Date: 1/1/03 Revision Date:9/11/2015 World Congress January 14, 2003 Victor Doolan President and CEO Volvo Cars."— Presentation transcript:

1 Volvo Cars of North America, LLC Issue Date: 1/1/03 Revision Date:9/11/2015 World Congress January 14, 2003 Victor Doolan President and CEO Volvo Cars of North America, LLC

2 Issue Date: 1/1/03 Revision Date:9/11/2015 VCNA Business Model Customer Satisfaction Best Vehicle Care Conscience Experience Value Industry Safety Leadership Functional Utility Leadership Quality Durability Leadership Environmental Leadership Commun - actions Dealer Customer Build Orientation Resale Value Lower Insurance Costs Tailored Value Finance Lower Maintenance People Expertise Consistent Best Practices Reward Retailer Achievement Product Life Care For Customer Profitable Retailers Profitability Brand Value Quality Durability Safety Vehicle Customer For Life Reduce Ins. Costs Experience Value Diesel Utility Environment Communi- actions Consistent Best Practices People Expertise Reduce Maint. Costs Best Residual Hybrid Brand Via Product Positioning Get it all right all the time Safety to be Inspirational Market Run DAGs Best Practices Convenient Times & Locations 1:1 CRM CRCs E-Com Maint Owner For Life Cycle Effective Loaner Car Prog Cust. Centric Roadside Asst CRCs Facilities Processes Systems Rewards Retention Program Training & Develop. Rewards Inventory Mgmt Build To Expanded Demand Pre-Owned Programs Tailored Finance Program Reduced Near-New Cars Market Pricing - Option Pkgs Develop Insurance Program Check Body Parts Pricing Increase Service Intervals Build-in Maint. Costs AWD Strategy Run Flat Tires Performance Lane Change Assist SUV Retractable Hardtop Option Pkgs Individual Models Growth in Volume Retailer Profitability Pre-owned Business Improved Margin Lower Cost of People Development Due to Lower Turnover Lower Inventories Lower Costs Less Unproductive Tasks(?) Lower Costs - Loaner Cars Floorplan Higher Owner Retention Lower Variable Marketing More Finance Income Better Model Mix Higher Service/Parts Retention Character 1

3 Volvo Cars of North America, LLC Issue Date: 1/1/03 Revision Date:9/11/2015 BUILDING RESALE VALUE RESALE VALUE IS THE ULTIMATE MIRROR THAT REFLECTS THE TRUE STRENGTH OF PREMIUM BRAND AS IT REPRESENTS THE CUMULATIVE EFFECT OF ALL ASPECTS OF THE BRAND, IMAGE, QUALITY, DURABILITY, PRODUCT DESIRABILITY, PRICING, MARKETING, REMARKETING, DISTRIBUTION, VOLUME MANAGEMENT, DEALERS AND, OF COURSE, CUSTOMER SATISFACTION. 2

4 Volvo Cars of North America, LLC Issue Date: 1/1/03 Revision Date:9/11/2015 Learning's from Previous 5 Years Large Residual Losses Initial values set too high Negative pricing New car incentives Supply – New and Used exceeded demand Pre-owned programs to mitigate losses 0% Finance, Customer cash in lieu of leasing 3

5 Volvo Cars of North America, LLC Issue Date: 1/1/03 Revision Date:9/11/2015 4 Leases as a Share of Overall Vehicle Sales

6 Volvo Cars of North America, LLC Issue Date: 1/1/03 Revision Date:9/11/2015 Next 3 Years Residuals at realistic levels Positive pricing Higher interest rates Reduction in “Off Lease Vehicles” New car incentive progressively returning to lease or dealer cash Possibility of incentives via “Free of Charge” option packages Continuous development of Certified Pre-Owned Programs 5

7 Volvo Cars of North America, LLC Issue Date: 1/1/03 Revision Date:9/11/2015 Build quality – durability Build desirability of brand – vehicle Establish competitive – right pricing, vehicle and options Balance supply and demand Reduce supply of “Near New” cars Remarket effectively via Certified Pre-Owned programs The art of remarketing in an era of high incentives is to market new cars correctly in the first place 6

8 Volvo Cars of North America, LLC Issue Date: 1/1/03 Revision Date:9/11/2015 Certified Pre-Owned Programs - Benefits Critical to ensuring effective remarketing of product Customers show increasing preference for Certified Pre-Owned because of greater confidence in the purchase Bring first time buyers to the brand Great discipline on manufacturers to ensure ongoing ownership costs, quality and desirability are competitive Efficient way to distribute off lease vehicles to the franchise system Brand equity can be effectively managed by utilization of residual reserves to support the sale Profit opportunities for franchise retailers 7

9 Volvo Cars of North America, LLC Issue Date: 1/1/03 Revision Date:9/11/2015 Certified Pre-Owned Programs - Challenges Substitution for new cars – retailer capacity Cost of advertising, promotion and support for certified programs 8


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