‘Volvo was very vulnerable’ The exec who co-wrote Volvo’s turnaround plan is now changing the way we buy cars.
It’s a great automotive turnaround story: how did Volvo go from being offloaded by Ford to posting its best-ever half-year financial results last month? Lex Kerssemakers has the answers. In fact, the Dutchman could write the company’s history, having served Volvo around the globe for more than 30 years.
He’s been on Volvo Car’s executive management team since 2004, and became the first non-Swede to run product planning. That was his role when the 2008 financial storm broke. ‘We were very vulnerable. Ford was going to sell us,’ Kerssemakers recalls. ‘We had no future engines, old cars – Volvo was almost gone. We had to replace a portfolio and modernise it.’
In 2010, the year Chinese automotive group Geely took over Volvo, global volume was 373,525 units. Volvo practically matched that total in the first six months of 2019 alone, selling 340,286 cars. That growth curve started with the strategy Kerssemakers helped write, covering platforms and powertrains.
SPA, the Scaleable Product Architecture, was conceived to underpin the company’s flagship XC90 SUV, but with sufficient flexibility to spawn the V90 estate and S90 saloon, plus the smaller 60 series offering the same three body styles. So far, so similar to the strategy used by the German premium brands. Then Kerssemakers presented a more radical idea: that new Volvo engines would be pegged at four cylinders. ‘I got tomatoes thrown by the engineers when we said we would stop five- and six-cylinder engines!’
There were question marks over whether a turbocharged four-cylinder would have the grunt to haul an XC90 seven-up, but it was a good call given the environmental push to downsize engines, and fitted with Volvo’s reputation for social awareness. It saved money too. And when a similar call had to be made on going electric at full speed, the engineers’ mindset had changed.
Diesel is also part of the shake-up: this year’s diesel engine family is the last of its kind, and there’s no diesel S60. Once the product plan was in place, the brand strategy followed. ‘We wanted to be genuinely Scandinavian, not copy and paste the others,’ the 59-year-old explains. ‘Of course we have the safety value. But don’t underestimate the role of design, that’s one of the main buying reasons: we made that transformation to intuitive, clean design.’ In addition to Thomas Ingenlath’s muscular, unfussy exterior designs, the interiors stand out for their pale woods and light colour options, and Volvo was early to follow Tesla’s lead with a large digital screen to operate multiple functions.
The range has been expanded with the XC40, which uses the smaller CMA architecture co-developed with Geely. The V40 hatch, the last of the old Volvos, recently ceased production, and won’t be replaced by a trad VW Golf rival. There are, he says, two things Volvo can’t ignore in creating its replacement: ‘A high seating position – even the low-seating-position diehards are moving to it. And you can’t offer a car that isn’t equipped to be fully electrified.’ All of which suggests the new car will follow the BMW X2 playbook – a sportier body than the XC40’s, but with a raised driver’s perch. ‘By the way, I don’t like high-riding cars, but that’s my personal view!’ says the man who owns a 993-generation Porsche 911 and an Alfa Duetto.
Volvo can get to 800,000 sales a year, he says, having topped 600,000 for the first time last year. ‘We can do that with the 40/60/90 ranges,’ he says. ‘The strength of the Volvo brand is something we have underestimated. It gives potential that’s difficult to calculate in a rational way. It didn’t always have the product to appeal to a wider audience. Now we see XC90 [in its midlife] growing. Product awareness is growing.’
The Dutchman is softly spoken, with little of the swagger car executives often exhibit. But he does contradict the suggestion Geely steered the turnaround. ‘There’s sometimes a misunderstanding they came with a big bag of gold and financed product development – that’s not the case. They brought continuity and stability, that allows us to get money in from third parties – they financed the turnaround which we paid off from cashflow.’ Kerssemakers, so often parachuted into tough assignments such as running the US and establishing Volvo’s first factory there, is now in charge of Direct Consumer Business. He’s at the leading edge of Volvo’s efforts to retail cars using the internet, and renting cars to consumers via the Care by Volvo subscription package. Typically the hire lasts two or three years, but that will come down to boost flexibility.
‘The retail network is thinking about the future and how they are going to make money. But if customers want to buy direct from the manufacturer, that should be possible. The world is changing,’ he says. Given the number of roles he’s held, Lex Kerssemakers is no stranger to change. Except in one respect: his singular dedication to Volvo Car Group.
Six questions only we would ask
Tell us about your first car…
‘It was an 18-year-old Vauxhall Viva in an ugly yellow.’
What achievement makes you most proud?
‘One was the Volvo turnaround from 2010. The other was running the US, 2015-2017. The dealers had gone through a tough period. But now they see the growth.’
What’s the best thing you’ve done in a car?
‘I drove to the south of France with a girlfriend in my 1974 Alfa Romeo Spider. It was a very good move – we got married.’ Tell us about a time you screwed up…
‘Early on in my career, I was in a negotiation and I pretended I knew what I was talking about. The supplier took me outside and said, “This could cost your company a lot of money”. It was a big learning: never pretend you understand something.’
Supercar or classic?
‘I’d rather go for a few classics. I have a 993 Porsche 911, the Alfa Spider, a Volvo Amazon estate and a military DAF 66.’
Company curveball: which 1972 Volvo innovation was inspired by space rockets?
[Pause] ‘Oh no, it appears I’m not qualified to speak as a knowledgeable Volvo employee any more! [Answer: the rearward-facing child safety seat]. I thought that was 1973!’