Volvo to Embrace Direct-to-Customer Model, Following Mercedes’ Lead

Volvo, the distinguished manufacturer of opulent automobiles, is poised to embrace the Direct-to-Customer (D2C) retail business paradigm, taking cues from the footsteps of Mercedes Benz India. This strategic maneuver ensues subsequent to apprehensions raised by industry pundits regarding the feasibility of employing such a model for vehicles catering to the masses, owing to their significant sales volumes. Nonetheless, Volvo ardently believes that this audacious approach will confer advantageous outcomes upon their esteemed brand and elevate the overall customer experience.

Direct Sales Model: A Positive Response for Volvo

Jyoti Malhotra, the Managing Director of Volvo Cars India, expressed contentment with the performance of the direct sales model for the XC40, affirming that customers have responded positively. Consequently, Volvo intends to expand the application of this methodology to the C40 Recharge and progressively shift all their vehicle models towards this direct-to-customer trajectory.

Streamlining Operations: From Stock to Invoice

In line with the D2C model, Volvo will assume complete ownership of its extensive inventory of distinct car models, empowering them to engage in direct sales transactions with customers through designated franchise partners. This streamlined approach allows Volvo to issue invoices directly to customers for their new car purchases, thereby streamlining the booking and ordering process.

Mercedes Benz: Pioneering the D2C Model

Mercedes Benz India blazed a trail for luxury automobile companies in India when they introduced the Retail of the Future (ROTF) business model in October 2021. Prior to its implementation in India, Mercedes had already achieved success with the ROTF model in South Africa, Sweden, and Austria. The D2C model has proven to be a viable and promising choice for esteemed car manufacturers in the premium segment. As a result, it is widely anticipated that other prominent brands such as BMW, Audi, and Jaguar Land Rover may gradually follow suit and embrace this progressive approach.

Tesla: Leading the Way in Direct Sales

Tesla, under the leadership of Elon Musk, has been at the forefront of selling their cars directly to customers worldwide through their online platform. Although Tesla offers showrooms where customers can explore and test drive their vehicles, the actual sales and transactions are conducted directly by Tesla. This highly effective direct sales model has propelled Tesla to a prominent position in the automotive industry.

The Viability of the D2C Model for Luxury Carmakers

While industry experts raise doubts about the practicality of implementing the D2C model for mass-market cars, primarily due to their substantial sales volumes, it has demonstrated promise and potential for premium car manufacturers. Volvo’s choice to embrace this approach serves as a testament to its confidence in its capacity to elevate its brand reputation and augment customer satisfaction. As other luxury car companies observe the successful implementation by Mercedes and Volvo, it is highly likely that they will contemplate the adoption of the D2C model as a means to streamline their operations and establish deeper connections with their valued customers.