Starting at approximately $41,650 pre-sale: Yu Kexin answers, who is Volvo XC70 really for?

Volvo recently launched the XC70 at a pre-sale price of RMB 299,900 ($41,650) to RMB 329,900 ($45,820).

Yu Kexin explained the choice of a luxury plug-in hybrid over extended-range options and highlighted the market potential in China and Europe. The XC70 targets both traditional luxury and emerging consumer groups.

Last night, Volvo pulled off a clever trick.

When announcing the pre-sale price of the XC70, they first displayed the above picture: RMB 446,900 ($63,000) to RMB 486,900 ($68,500).

When this picture was shown on the big screen, some people clapped twice, but it quickly stopped. There was a momentary sense of stagnation.

On the stage, Yu Kexin, President of Volvo Car China Sales Company, waited for a while, smiled, refreshed the PPT, and finally locked the price at RMB 299,900 ($41,650) to RMB 329,900 ($45,820).

At the scene, you could feel that some anxious hearts instantly relaxed, and then there was applause.

To be honest, is this a surprising price? And also a price that shows a clear understanding of reality.

After the event, we had a chat with Yu Kexin: Why set such a price? Who is the XC70, which is officially positioned as the first luxury plug-in hybrid vehicle, intended to be sold to? What other moves does Volvo have next?

Let’s start.

This interview was quite special. We had been asked for our questions in advance, so Yu Kexin said at the beginning that he would change the format today and displayed eight sorted-out questions on the big screen.

Among them was the pricing issue that we were particularly concerned about.

Yu Kexin first answered the reason for choosing super hybrid instead of extended-range, mainly elaborating on four aspects: user needs, market pattern, original technology, and global perspective.

The most crucial point is shown in the above picture. Although extended-range is one of the mainstream technical routes in China, globally, the proportion of extended-range is negligible. In the new energy vehicle market, pure electric vehicles account for 60.9%, and plug-in hybrids account for 34.6%.

Although the XC70 made its debut in China, it will definitely be sold overseas.

Yu Kexin revealed that the XC70 will first enter the European market. Moreover, they often have meetings with the sales company in Germany.

“When they saw this car, they just said one thing – come quickly. So we are full of confidence in the prospects of this car overseas.”

As for pricing, Yu Kexin was very straightforward, saying that the price of the XC70 is between the XC60 and XC90.

In fact, he has been racking his brains on how to form a differentiated positioning between the XC70 and the XC90 and XC60 after the XC70 is launched.

Because Volvo is different from new power brands. When a new brand launches only one new car, it has a high degree of freedom in pricing. But Volvo can’t. Its basic models include the XC40, EX30, XC60, and above that is the XC90. How should the XC70 be positioned among them?

In his thinking, for Volvo, it is still necessary to consolidate the basic market. The XC90 plays the role of a flagship image, the XC60 continues to penetrate the mainstream fuel vehicle family user market, and maintains its customer base with word-of-mouth and cost performance.

The all-new XC70, as the first luxury super hybrid vehicle, needs to break through, make a breakthrough in the luxury new energy market, and expand more market increments. “We want more customers to know that Volvo has a super hybrid new energy vehicle.”

This kind of thinking is also one of the core reasons for the current pricing of the XC70.

The base price of the XC60 is RMB 254,900 ($35,400), and the base price of the XC90 is RMB 479,000 ($66,500). So the XC70 is priced between RMB 300,000 ($41,700) and RMB 400,000 ($55,600), with the two-wheel drive version at RMB 299,900 ($41,650) and the four-wheel drive version at RMB 329,900 ($45,820).

Of course, there will be more surprises in the price when it is officially launched on September 26.

After explaining why the plug-in hybrid route was chosen and why such a price was set, the last key question remains: who will buy this car?

In this regard, Yu Kexin has a very clear understanding of reality.

He frankly said that the biggest difficulty most luxury car brands are facing now is that customers will not go to traditional 4S stores that sell fuel vehicles to look at new energy vehicles. Unless customers particularly want to buy fuel vehicles, such as customers in Northeast China, Northwest China, and North China.

However, this does not mean that the brand of luxury brands is not attractive.

In Yu Kexin’s view, if the capabilities of the intelligent cabin and intelligent driving can be improved, consumers will still give priority to the brand.

So, who is the XC70 sold to?

Look at the above picture: it cuts into the middle ground between traditional luxury brands and new forces, retains the luxury’s own customer groups and hesitant groups, and expands the compromise groups of new forces.

This is the positioning of the XC70!

Yu Kexin said that Volvo actually regards the XC60 and XC70 as a dual-car strategy.

This year, with only the XC60, Volvo has already ranked 3rd (among 8 traditional luxury fuel vehicle brands). They expect that next year, with the dual-car strategy of the XC60 and XC70, they will rush higher, to about 26%.

And if we include high-end products priced above RMB 200,000 ($28,000), including those from new power brands, Volvo will have a 15% to 16% share in the segmented market from the second half of this year to around next year.

After the launch of the XC70, Volvo hopes to become the first among traditional luxury brands in 50 cities in China, and rank among the top three in 80% of the cities. This result should rank first in the traditional luxury track.

Yu Kexin said that in many cases, whether a luxury brand can successfully transform mainly depends on sales volume. If the sales volume meets the standard, then users will naturally feel that Volvo has successfully transformed. They want to use the XC70 to win a beautiful turnaround for Volvo.

(End)