VOLVO TO SPEND MORE ON ADVERTISING

PLAN INCLUDES MORE TV DOLLARS Volvo’s new owner and management team plan to spend more on advertising to reignite lackluster sales.

Volvo — owned by China’s Zhejiang Geely Holding Group Co. — posted a 12% decline in U.S. sales last year, reflecting lower leasing activity and model changeovers. Volvo’s lease penetration was about 10% last year. “We were running on a strat...egy that maintained margins at the expense of volume,” said Doug Speck, CEO of Volvo/North America.

This month, Volvo began offering competitive lease rates — such as $299 a month for 36 months with $1,995 down — on the new S60 T5. The new leases, mainly on the S60 sedan and the XC60 crossover, should push Volvo’s lease penetration to 20 to 30% of sales, which is still lower than the 40 to 50% lease penetration rate of rivals, Speck said.

He said Volvo likely will never reach lease penetration of 40% or more because buyers receive free scheduled maintenance for five years/60,000 miles. The maintenance program “makes buying a Volvo a very good value by comparison and will balance the percentage of what we do in leasing,” Speck said. Volvo will increase its advertising this year. he said spending in the first quarter alone will be “equal to the amount of money we spent last year.”