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EDITORIAL
Badge culture, what’s safety got to do with it?
AID Newsletter Editorial 1223 from Peter Schmidt -December 19th 2012
Published: Wed, 19th December 2012 13:41:16 GMT



Vovlo crash test Sweden

Open quote signSweden’s last remaining carmaker has a justifiable reputation for the excellent safety of its cars, even by today’s very highest European standards.

In the unlikely event of being involved in a car accident, most motoring journalists, given a choice to pick an affordable non-premium brand model for the experience, would probably choose to experience such a crash in one of Volvo’s recent models.

None of this ranks as classified information.

Ask Joe Public to rank today’s car brands by safety, and you’ll probably find Volvo near the top of their list.

And yet, in the cold light of day, none of that matters in the world’s car showrooms, least of all in today’s still prevailing snob-culture. In this respect, China’s nouveau-riche probably take the top ranked position.

Safety, that’s the safety record or reputation of a particular carmaker like Volvo, doesn’t appear to have any, or at least little clout in the car purchase decision of today’s well-to-do in China.

Consumer sentiment in Europe, judged by Volvo’s slightly worse than average car sales performance in this year’s contracting West European car market, appears rather similar.

Why?

Chiefly because label or badge-culture appears rampant.

And not just in today’s iPhone generation.

A trendy badge conjures up all the right images – even if the trendy nature of the mere label or the badge often proves more potent than the actual substance of the product itself.

As it turns out, China’s rich, probably more than any other nation at present, appear more concerned at what their newly acquired car says to the world at large about their social status and the size of their wallet.

That means that high-image cars from top-notch premium car makers are bought chiefly on the image strength of their high-status badge.

As it turns out, for all those with deep pockets, the sky-high price of these wheeled status symbols appears no barrier.

Paradoxically perhaps, the higher the sticker price of these status-symbols, the higher the appeal.

That means that fully built-up luxury car imports such as Porsche’s Cayenne, BMW’s 7-Series or Audi’s A8 for instance, which attract the full force of China’s car import duty, have been all the rage with China’s status-conscious wealthy.

So much so in fact, that Mercedes and BMW now sell more of their top-notch German-made stretched luxury limos in China than anywhere else.

None of that is new.

To an extent, some of this sentiment was already echoed in no less showy Japan during the peak years of Japan’s infamous bubble economy.

Whilst Japan is a market for right-hand-drive cars, a large proportion of Mercedes S-Class buyers in Japan opted for the left-hand-drive version, because that way it stood out instantly as exotic and pricey in a market where 99.9% of all new cars are of course right hand drive.

Deeply recessionary Japan has changed a great deal since, but in this respect – showing off one’s financial worth by way of the car owned, China appears to have taken up the baton.

When Ford’s hard-nosed US decision makers decided to jettison their earlier acquired Volvo car manufacturer to the highest bidder, a tiny and comparatively inexperienced Chinese car manufacturer decided to take the reins.

And as with Rover before, which was given far too much initial freedom and leeway by its Munich based BMW owners, Chinese car maker Geely, which owns Volvo Cars, also left its new acquisition with too much leash.

As it turns out, widespread earlier expectations of flourishing Volvo sales in Geely’s domestic Chinese home patch have blatantly failed to materialise.

If anything, Volvo’s performance in China probably ranks as one of the market’s greatest disappointments.

By any measure, Volvo’s woeful showing in this year’s Chinese market bears testament to that.

Recent developments best sum up Volvo’s poor performance in China’s still flourishing prestige sector market.

Particularly so when considering that it is now fully owned by one of China’s own carmakers.

During the eleven months to November this year, made up of both locally assembled and fully built-up imports, Volvo sold just 37,600 new cars in China.

Put into perspective, that’s the number sold by Audi in China during November alone.

It brings Audi’s eleven months sales in China to 295,974. Yesterday’s Financial Times summed it up nicely when saying “Volvo to shift up a gear in China”.

The way things stand at present, High time for Volvo to shift up a few gears in China, would have summed it up even better.
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