Bonus: Autocar meets Volvo UK MD Nicole Melillo-Shaw

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Welcome to AutoCar Meets the Bonus Podcast from AutoCar, in which this week our magazine

editor, Rachel Burgess, interviews Volvo UK managing director, Nicole Malillo-Shaw.

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Now it's over to Rachel.

Hello, I'm Rachel Burgess, AutoCar's magazine editor.

Welcome to another episode of AutoCar Meets, our regular podcast in which we chat to some

of the car industry's high flyers.

This time we're talking with Nicole Malillo-Shaw, Volvo UK's managing director.

Hi Nicole, thanks for your time today.

How are you?

I'm good, thank you.

Hi Rachel.

Firstly, let's talk about recent success.

September has been the most successful ever for Volvo in the UK.

Why is that?

So firstly, over the moon with our September performance, in fact over the moon with our

year to day performance, what it comes down to really is since we've moved to the direct

consumer model, we've launched a fantastic new product in the X30.

We've also really got to grips with our retail journey, so our retail channel has grown and

we've got some momentum in terms of how to go to market with our consumers, how to make

sure our brand is appealing to them.

And yeah, it's laddered up from a fantastic start to the year with a record breaking Q1

and then coming out of Q2 with some really strong building of order take, we've then

just, as you say, hit our all time high in September, so absolutely over the moon.

Retail is a really important channel for us, it really, that end user, really demonstrates

that we're hitting a key area that we need to for our business, so more consumers are

choosing our brand as well, so our market share has increased to 3.2 year to date and

looking forward to a strong second hand as well.

And you mentioned the EX30, I mean other than that car, which models are performing the

best for you?

So, XT40 is our biggest seller by far, that's a really important component of our growth.

But EX30, we're really seeing that it's gathered momentum over the last few months as I said,

so we're actually now seeing that it's doubled in terms of order take, so really important

particularly with our ambition for electrification and what we're moving to, so we're seeing

more and more on the road as well, which is great.

Volvo has built on its direct sales model to sit alongside the traditional sort of dealer

models, can you explain briefly how it works and what your plans are for it in the future?

So yes, the direct consumer model is something that we launched in June 2023, really in partnership

with our network and VCC and VZUK teams, we've really now transformed our business and it's

more than stable, we're really flourishing in this model now, so the whole point of it

is to have a transparent pricing for consumers, get away from some of that legacy negativity

around having to haggle over price, so we've really moved the dial when it comes to that

and we're also getting better at consumer closeness, which is critical as well, so our consumers

are able to enjoy the experience more, this word omni-channel that we've banned around

a lot, being able to shop at retailers or online, excuse me, or everything in between,

so we've really embraced that, but really now, to answer your question, it's about taking

it to the next level and making sure that we are able to leverage that data with our

consumers and bring that relationship to life so that we can really really stand here and

say that we've made meaningful change in the automotive industry.

Direct sales models have been a bit contentious across several brands in the last few years.

How have you continued to foster strong dealer relationships despite this changing face of

the car market?

I think the first thing is we've worked very closely with them because this is something

that needs to be done in partnership. If you don't do a partnership, then the consumer

will fall down the middle, so we've absolutely worked well in advance of the launch, probably

about 18 months or two years in partnership with our key network partners to deliver something

that is relevant and meaningful and that conversation hasn't stopped, so we're still very much closely

in touch with them around how to optimise the model and how to make it better. I think

that's the first thing. If you look at the dealer sentiment or the retailer sentiment,

it's very very positive around how we've done this together and what it means for them as

well. At the end of the day, we all want to make it better for the consumer and the customers

in front of the retailer quite often, so it's important that that was developed in partnership.

There's been quite a few issues with Volvo software. The EX90 was delayed and we know

some customer complaints. I know that's something you've been quick to address. Can you explain

what the situation is now?

Yes, so EX90 is by far our most technologically advanced product. We're really proud of what

it is and what we've achieved with it. I guess we've learnt a lot along the way. We've taken

those learnings as we move forward in our electrification journey because we are committed

to electrification. We are committed to technology and it's important that we can continue to evolve

on that. As we launch model year 26, there is a significant software update and we're really

seeing now that step change, which is delighting customers, will delight customers as it lands,

but for me personally, it's a car I drive every day. I really enjoy it. It's another level

and I think that's the difference with having a product that's been built from the software

out rather than trying to reverse engineer. There's a lot to come and I think where we've

got to as a business is really feeling that in this new era, it's about the car evolving

through these software updates and we work really hard to make sure that they're meaningful

and customers are getting a better product with every update that comes along.

And so on that, more broadly speaking, with cars like the EX30 and the EX90, have you had to do

quite a big education piece so your customers are getting the best from this software?

In terms of making sure they understand how to use it, our retailers have gone through a

lot of training because it is new to everybody, new to our retailers, new to us. What we found

though is when they have really understood it, they're able to add value quite quickly

and we've seen that because the profile of consumers embracing the EX30, for example,

is widespread. We've had people 60 plus as well as the younger demographic as well so

we've really made sure it's meaningful across the board and importantly easy to use.

You mentioned your commitment to electrification. Obviously, there was the recent introduction of

the new plug-in car grant. The EX30 wasn't eligible because it's built in China and I know

that you've launched your own £1,500 grant. How has that played out and how much a challenge

has it been to compete against cars that are eligible? I think it's important to say that we

are supportive of the electrification movement. We're supportive of the government's ambition

where obviously we need to have conversations around how we go about that and how we make sure

that the support comes back to Volvo. But you're right, we're not eligible because of the way that

the government has put the principles in. What we decided to do is make sure that the customer,

the consumer, was not at a disadvantage. What we've done is made sure that that £1,500 that we

believe we would have been eligible for is baked into the offer. Without waiting to see if there

was any eligibility or waiting to see if we would get the funding, we did that quite quickly

because it's important that we lean in as a key brand supportive of sustainability and

electrification to do that. From the outset, we went quite loud and proud with that and we've

seen EX30 grow as a result. We saw immediately the interest level from the grant noise on our

website and then we're able to convert quite quickly as well. It's all going in the right

direction and for the right reasons. On that, there's a general consensus that the electric car

market is softening. Is that something you've seen at Volvo in your sales?

Not at all. We've actually seen that the electric of the Bev area is growing.

The appetite is growing. I think that there's a whole population of customers that are in that

camp hall now or next one. Shall I have one more ice car? Our job is to make sure that they have

the information to choose the right car for them. We have got a balanced portfolio. However,

the most innovative products and the ones that we believe are the best cars are electrified.

To the point about our network and our teams and our e-commerce team, etc., they're all geared

behind making sure there's nothing we're holding on from choosing an electric car. I suppose if

they do choose a hybrid or an ice car, it's not because we haven't given them the information

it would give them that comfort. I think electrification is definitely the future.

We are growing year on year. The EX30 has been a key pillar to that and we're going to continue

to launch products in that space as well. There's a couple of big cars coming up for you. The Flagship

ES90 and the EX60. Let's start with the ES90. How do you plan to position a car at that level of

the market and where do you expect your Conquest sales to come from?

ES90, I try not to be too boxed in on this because we all know consumers come based on a car they

like, but I think it's inevitably a fleet car because of the profile and the segment it operates

in. I also think when we look at consumers and some of their concerns or questions, we know range

has been won. The ES90 will have over 430 miles at full charge. That's definitely going to appeal

to those that may have that kind of nervousness. We are going to launch it at full pelt and I think

there'll be a big take-up from fleet, but I'm also interested to see where else we might capture

interest from. What sort of person do you think is going to buy a car like that?

What we've looked at is definitely someone who's interested in electrification,

but also when you're doing longer miles, if that is a question mark, that being over 430,

it's got to eradicate a lot of concerns. When I've spoken to Network about this, the first thing is,

okay, that's another jump on. That's something now where it is not going to be, you can definitely

get from A to B without having to think about charging. It takes that conversation away. I think

when you're at a lower end, you're thinking about charging along the way, whereas when you get to

400 plus miles, you can definitely do a journey or a return journey in that time. Also, it's not an

SUV, which is important as well because we've got a really good lineup in the SUV space,

so it appeals to a different consumer as well. Yeah, I suppose that's what I was thinking in

terms of it being a slightly different segment. As you say, people buy cars and moving between

segments, but it's not as easy to position for people as your XC60 or your EXC60.

I think it's important that we are diverse in our offering, so that's one of the things that's

great is we know that there is a segment for that. I actually think the electrification element of

that style of car will bring in an additional consumer as well. Then the EXC60, the electric

version of your best-selling XC60, which I see them everywhere. Lots of my friends have them.

How crucial is a car like that to EV transition? EXC60 is absolutely pivotal to our growth,

absolutely pivotal. We've just obviously done the refresh of the XC60. We've had the

fantastic reviews from Joan Clarkson, which has gone live just recently. We really see that that

is a fantastic mid-SUV, so it's a really go-to family car. Launching that in an electrified

space with the software, with the technology, with the extra range, all of those things,

it's going to be a key building block for us as a total company, but particularly for the UK.

So we're looking forward to launching that. When does it land? It lands Q4 next year.

Okay, so late next year. We will be doing the launch in Q1, so that's fully on track.

Traditionally, Volvo has been seen as a left-field alternative to Audi, BMW, Merck.

Things have moved on a lot in the last few years for everyone, but at this point,

how do you differentiate yourself against those obvious rivals?

Yeah, it's a good question. The competitive environment is just absolutely wild at the

moment. Not only have we got traditional, as you mentioned. We've also got more Chinese entrants

coming in. Consumers have more choice than ever, which is challenging, but it's also great because

it keeps pushing. It keeps making sure that as manufacturers, you're able to really think about

the consumer first because you have to fight for every sale. So I think that's a really good thing.

One of the things that we do and we're really proud to do is lean into our credentials and what

we stand for, because I think that means that if we are standing for that humble, but strong,

responsible brand that is rooted in safety, that gives us a point of difference not only to the

traditional manufacturers, but also to the Chinese entrants as well. So across the board, we just

keep relentlessly doing what we do best, making sure we're clear on what we stand out for.

And that is really resonating. We've seen that our willingness to pay and brand desire is

increasing, which is really important, particularly as a, I don't know if I should say X market here,

but somebody who's worked in that space, knowing that people really see why you would pay more for

a premium brand like Volvo, as you say, wasn't always the case. Now we're able to really justify

that and we're not moving away from those credentials. So we're very proud to talk about

safety, even when we're moving into electrification and new news, still safety first.

The safety piece, it's very interesting because I feel like I've known that in Volvo for as long

as I've done this job, which is a long time now. Do you recognize in dealerships, do customers talk

about the fact that they're there because of safety? What are their particular features that

they know as being on a Volvo or is it just this overarching sense that a Volvo is safe?

Yeah, I think it's an overarching general positioning that we've been consistent with

on the beginning. We had a conference very recently, we took our investors to the Safety

Centre in Sweden. If there is any doubt ever in anyone's mind around the jeopardy of a car,

so yes, everyone talks about 0-60 or whatever and that's a key excitement point, but actually

watching a live crash test, you could hear a pin drop and everybody was just silent for a good

10 minutes afterwards on the basis that it brings home just how powerful these cars are generally

and actually if it goes wrong, the first thing you want to be thinking about is the safety of that

we watched it live, it was really critical and the main thing I had as feedback is we need to

make sure we bring this to life more and more because to the point I made, as soon as you're

thinking about your son and daughter driving a car, the first thing you think about is safety

and I think we've been really consistent around that message rather than trying to move on to a

new one because actually that is our heartland, it's what we stand for and all of us are immersed

in that and unapologetically so, it's a key building block so I think the general feeling is

we've been consistent therefore safety is rooted in our DNA rather than it's because of this feature

or this feature, it's a general composition from all of us. Okay thank you, moving on to you,

so you used to work in consumer goods and for brands such as E45, you've been in the

country for a few years now, it must have been a huge transition for you, what was the appeal

in the first place? Well I mean mainly the whole family brand piece, when the opportunity came

along I always look at brands, brand appeal, brand equity and also love working on brands that have

a really strong heritage and then grow from that so really anchored in something meaningful

and then moving more into mainstream so E45 being one of them from Heartland in Exma

through to, I'm sure you haven't chatted about that very much in this space, but Heartland in Exma

through to mainstream moisturization, the same with the car in terms of Volvo having a rooting

safety and then the evolution to these modern products that we see today and it being such a

family brand, it felt like if you put the consumer at the heart of everything you actually can see

that transition is more natural than you might think rather than thinking FMCG, FMCG2 automotive

which makes less sense, think about the end point and it really did appeal and also I think when

you get into being a leadership role having a culture fit is absolutely critical and I felt that

as soon as I walked in. So you've mentioned some commonalities there, what did you identify as

you know the transferable skills that applied in both of those settings? Well I came in as

consumer director so the only thing I could do was represent the layperson which I felt the

industry was missing because most people here and most people in other areas have worked in the car

industry for a long long time, probably haven't bought a car in 20, 30 years and I felt it was

a really good opportunity to represent the consumer, talk about some of the pain points, bring them to

life, ask questions and really challenge how we do things in a different way and the great thing

was coming in as a consumer director the expectation was exactly that so it wasn't to know how to

operate in the business as it is today, it was to shed light on how we get better with interacting

with our customers and how we set up with the direct model so that was a really good opportunity.

So you've sort of identified some areas there that could have could be improved upon,

conversely what are some strengths you've seen from the automotive industry?

So I think when you go through any kind of transformation, transmission is hard,

the first thing that happens is you all lean in as a collective and from doing that it's really,

really, really eye-opening how the consumer is really the central part for everybody and actually

how retailers as much as there's a profit to be made and we shouldn't be apologetic about that,

they really, really care about the customer and some of them have had family members come through

the ranks, buying cars off them for a number of years and they were so passionate and also

passionate in making sure that they look after them. Now all of that translates in different ways

but the core of it when we were doing the particularly the director consumer transformation

was we all want to make sure that end person gets the best outcome, whatever that is so there was

lots of things to fix obviously when I came in around pricing the haggle feelings some of the

things that are perceived as quite negative but actually that closeness and that relationship

that they built over the years and years is something that they held really, really close to

their hearts and I could really see the passion there. So you've been at Volver for five years?

I'm half, yeah. What has been your biggest highlight in those five years?

It's got to be the direct model, I mean doing something that the rest of the industry largely

turned its back on and being bold enough to keep going you know when we went through the

initial setup of making sure it worked and then getting the phenomenal results that we've had

so you know growing to 66 and a half thousand units which we've never surpassed 60 or certainly not

since 1989 and being able to do that with confidence and importantly growing market

share to three and a half percent that was you know to do that knowing that more people are

choosing our brand is just been the key highlight for me and bringing the team on the journey as

well because to go to that outcome and knowing now that we're in a really strong place we are

the biggest market in Europe the third globally for Volver cars that's really important and being

able to do it in my way as a leader and bringing people on the journey has really really that's

definitely the bit that I'm most proud of. Brilliant so one final question what are you most excited

about in the next 12 months for Volver? So many things um there's lots more to come we've talked

a little bit about the product launches that are coming I think the thing that I personally am most

excited about is the next phase of D2C because we've really now proven we can operate in the

model we've proven we can do it at scale you know the September number really demonstrates that

the March number demonstrates that um but now taking it to the next level are really demonstrating

why going to direct to consumer enables better consumer closeness it enables us to leverage

data better um it allows us to really work as a collective team and allow people to shop how

they want to shop I think that's the bit that you know we're going to see happening now in the next

12 to 18 months so taking it to the next level we're all really excited about that. Brilliant well

thank you so much for your time and best of luck with it all. Thank you thanks for joining us for

this podcast Steve Cropley and Matt Pryor that's me we'll be back on Wednesday for our regular

Acast powers the world's best podcast here's a show that we recommend

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Bonus: Autocar meets Volvo UK MD Nicole Melillo-Shaw

About this episode

Volvo EX30

Volvo XT40

electrification

direct sales model

transparent pricing

omni-channel

Volvo EX90

software update

plug-in car grant

£1,500 grant

BEV

hybrid

ICE car

ES90

range

Dodge Journey

Volvo XC60

Volvo EXC60

EV transition

mid-size SUV

safety

0-60 time

crash test

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