Volvo is using consumers to help determine the pricing and sales volume of the C30 hatchback.
LOS ANGELES -- Perplexed about how to price and position its upcoming C30 hatchback, Volvo is trying an innovative form of market research.
Shoppers are being invited to outfit a C30 with options and packages on a Web site.
But the online price for the C30 keeps changing. Volvo is moving the sticker up and down like a yo-yo, testing the market to see what response it gets at various prices.
The prices listed for options keep changing, too.
The tactic is unusual, if not unprecedented.
But pricing the C30, which is scheduled to go on sale in North America in eight months, is tricky for Volvo. For one thing, the sporty three-door is not your garden-variety Volvo. For another, the weakness of the dollar against the euro and Swedish krona makes it hard to turn a profit on low-priced models.
Finally, Volvo isn't sure how many C30s it wants to sell in America - whether it will be a low-volume niche car or something more.
The idea of using a Web site to help sort out such questions came from Anne Belec, CEO of Volvo Cars of North America Inc., according to a company source. The site went live Jan. 27, and the base and options pricing on the site have been fluctuating ever since.
In flux
On March 8, Volvo listed a C30 at $24,970 for the base model and $28,270 loaded, not including a $695 destination charge. But on March 14, prices were $23,154 and $26,214. On March 22 the base price was $21,565 and the loaded price $24,415.
In all cases, the base model included a 218-hp turbo-five engine, six-speed manual transmission and 17-inch wheels.
Volvo spokesman James Hope says the company is using the feedback mostly to determine inventory allocations, not necessarily to set the price.
"The pricing is used to estimate the take rates of the options at the different pricing levels," Hope says. "This will help Volvo build the right mix of cars."
The site is not being used to take advanced orders, he added.
Volvo will announce the prices at the New York auto show in April.
Moving targets
Interviewed at the Geneva auto show this month, Volvo Car Corp. CEO Fredrik Arp said the automaker is still "debating whether we will have somewhat of an aggressive volume strategy or a very niche-oriented strategy" for the C30 in the United States.
Arp defined "aggressive" as a 20,000 sales target; a "niche" target would be 5,000. The niche model would have a lot of standard equipment, Arp said.
He said Volvo will meet with dealers in the second quarter to get their marketing ideas.
Volvo needs the C30 to attract younger buyers, say U.S. dealers and some executives at Volvo Cars of North America. But their suggestions for lively exterior colors and a Mini-like marketing campaign have fallen on deaf ears in Sweden.
Factored into the U.S. strategy are the car's global sales, which have exceeded expectations since its debut in Europe late last year. Assembly capacity in Belgium is around 65,000 units and could be as many as 75,000 with some tweaks, Arp said.
A Volvo North America source says U.S. annual sales are likely to be around 12,000 units.
C30 marketing is only one of Volvo's challenges this year. Top U.S. marketing executive Hans Krondahl is leaving in April to head Swedish supplier Meca. His final job will be to pick the winner of Volvo's $150 million U.S. advertising agency account review.
The new agency will be responsible for the C30 campaign, as well as for two other redesigned vehicles also arriving this fall: the V70 and XC70.
By Mark Rechtin and Rick Kranz | Automotive News
