Volvo’s digital launch of the XC90 marks ‘connected car’ era

When Volvo unveiled its completely redesigned XC90 luxury SUV in August 2014, the Swedish carmaker took the unusual step of announcing that a limited run of first edition models would be available to customers exclusively through the volvocars.com website.

Just 1,927 of these vehicles would be sold, to celebrate the year of 1927 in which the company was founded. To say that consumer interest was piqued would be an understatement: all 1,927 cars were sold within 47 hours.

According to the company, most were reserved within one hour of sales opening at 4pm Central European Time on Wednesday, September 3. At peak demand, seven cars were sold every minute.

The official corporate response to this online feeding frenzy showed true Scandinavian understatement: “We are very pleased, but not really surprised,” said Alain Visser, the company’s senior vice-president of marketing, sales and customer service.

But, in fact, there was a great deal riding on the success of the XC90. Not only was it the company’s first all-new model since the Gothenburg-based carmaker was acquired by Chinese company Geely in 2010 from previous owner Ford, but the launch followed $11bn of investment in new components and factories. The feeling among senior Volvo executives, expressed frequently in media interviews, was that they were not just launching a new model: they were in effect launching a new company.

That is why it made sense to try the internet-only tactic when selling the first edition XC90, according to Klas Bendrik, senior vice-president and CIO of Volvo Car Group.

“We’re living in the age of the connected customer, when digital interaction with consumers is becoming tremendously important for the automotive industry,” he explains.

The aim of the launch, he continues, was to deliver a thoroughly modern customer experience, which brought together the worlds of digital commerce and Volvo’s existing manufacturing facilities and dealership network. It involved his team integrating a sleek new web front-end to capture orders for the first editions with Volvo’s back-end systems for finance, sales, order management and manufacturing.

But the involvement of the IT team in the development of the XC90 actually began much earlier, he stresses. Volvo’s aim was to deliver the most modern “connected car” on the market, which dispenses with the usual array of dashboard buttons, replacing them instead with a large tablet-like touch screen.

The IT team played a key role in the development of the new interface for this touch screen, says Mr Bendrik. For a company that has a reputation for safety to maintain, it was vital that the display allows drivers to navigate the system easily, without having to take their eyes off the road too often.

“Usability has always been important to Volvo. We’re proud of taking a user-­centric approach. Touch screens remove complexity from the driver experience, so it’s not really about technology. It’s about a better customer experience.”

The touch screen connects the driver to a range of in-car controls, but also to cloud-based applications, which Mr Bendrik’s team was involved in developing and integrating. These vary from market to market, but typically include GPS-enabled navigation capabilities, internet radio and music streaming services and applications for identifying and paying for parking spots, for example, or locating restaurants at the destination. In addition, drivers can integrate their smartphone with the system, so they can use their mobile device through this touch screen.

“This is a fantastic time to be working in IT within the automotive industry, because there’s so much scope for innovation,” says Mr Bendrik, who sits on Volvo Car’s executive team and reports directly to CEO Hakan Samuelsson. Increasingly, he is recruiting new team members from other industries, including retail, telecommunications and software companies, in order to bring “fresh perspective” and “cross-fertilisation of ideas” to the business of digital transformation at Volvo Cars.

“The IT department is moving way beyond being an internal service provider for the business. Of course, we still need to make sure that email systems, financial systems and manufacturing systems are up and running. But, at the same time, we’re moving forwards all the time.

We’re playing a big part in how the company asks vital questions about its business. When can we launch the next model? How do we bring in the next sale? How do we decide on the services and capabilities that our customers will expect will expect in future? What does our journey as a company look like?”

For now, at least, the XC90’s own journey looks pretty smooth. Between January and June 2015, Volvo Cars received 45,000 orders for the vehicle, against a company forecast of 50,000 for the entire year. Notwithstanding the “short-term pressures” this placed on Volvo’s production capabilities (now resolved, according to company executives), its connected car seems to have found favour with connected customers.