Talking safety, autonomy with Volvo NA CEO Lex Kerssemakers in Detroit

[MUSIC] Live coverage from the North American International Auto Show in Detroit, Brian Cooley with editor-in-chief Tim Stevens of Roadshow. And joining us now, really pleased to have him back again this year, is Lex Kerssemakers who's the North American CEO for Volvo cars. And Lex, thanks for being with us again this year. And thanks for doing another fascinating press conference again this year, because you guys are As far as anybody in terms of the farthest out- Absolutely. Of real self driving, right? The first to bring a fully autonomous car to consumers. And the first one was delivered today to a family in Gothenburg, south of Gothenburg, I think they said that they lived. And that delivery took place today here in Detroit. Yeah, we advised that the family [UNKNOWN] from Gothenburg, we flew them in, because It's very interesting. Autonomous drive is lot about technology and a lot about regulations. But it's very few who talk about actually those who are going to use the cars. And so where the Volvo brands, we have a long history. We are a very Human centric brand. So we would like to know, and that's what our test in [UNKNOWN] is about end of this year. Where we put 100 families into the car and see how they are going to use it in their daily lives. Because at the end we can talk about technology and all the other things They have to feel comfortable in it. They need to be convenient with all the technology. How will your team, sorry. How will your teams be reporting back to you and your senior management about what you're finding. Is it going to be a dialog and an interview from time to time, do you have special sensors in the cars that will Be able to tell you how they are using them. This is gonna be fascinating and it's new data that no one's ever harvested before. Yeah. Now we, the word Tesla engineers, totally not probably not totally appropriate but they will be With us they are, in respect of autonomous drive, they are a voice of the regular customers. So we will have interviews. They will fill in some data sheets on how they use it and when they use it, so they become an integrated part of the development process. And how does automotive insurance work in this case. Is Volvo paying for the insurance for these cars? Yeah, we take care of everything related to the car. So it's our car, they drive it, and we pay them. They pay us by giving the feedback. It's a pretty good deal. Yeah. So, its- For a nice car, too. Yeah, absolutely. [LAUGH] But they have to apply for this so they send in videos. What was the criteria? How did your team choose who was best? Because it wasn't just a promotion. This is real research. No, and there is no good or bad because what is a good family and what is a bad family? You wanna know Ray, right? so we just want to have a normal family, but again what's a normal family? So we asked them to send in a video about their family life. Who's driving the car, how do they interact, what's their social life, do they have sports club obligations or whatever. So they had to apply for it. And then we selected based on a number of criteria and say okay, this is a good family and the family [UNKNOWN] is one of them. It's nice to see to something that's not done with big data. That's true, absolute. Something with a- [LAUGH] Just common sense. [CROSSTALK] And a lot of human touch because we talk about humans, human being and our customers. So this is only in Sweden right now. Can you give us an idea of where might be the next test market and basically when can I get one cuz really that's all I want to know. We will run a similar project, or we have plans to run a similar project, in London and in China where the place is still to be defined Now, I'm biased because I'm a big, big station wagon format lover. So, that V90 is so damn pretty. [LAUGH] It's just gorgeous. You're not wrong. That is a pretty car. I mean, the way the design DNA pushes across the 90s, I just think it looks the best on the V90. That shooting brake style, it just draws it out, What are your expectations for a station wagon style vehicle at a time when everything seems to be going toward a chunkier, taller vehicle. What's the rationale behind that? Yeah, we still have, Volvo is well known for sports wagons, and we have lot of solid customer base also in the United States. It's not the highest volume, but they expect us to bring a sports wagon. And what we said is that okay. We wanted to launch the V9 in the United States but we did not want to have all the high stock levels, retailers taking cars on the yards and so lets turn it around. Lets utilize the trends happening in society. Online sales increasing. Tailor made service for individuals is increasing. So we have decided two things, first of all we're going to sell the V90 in the United States only online. At the end, the retailer has taken care about the delivery. But the customer can order the car online, either behind his or her desk Or together with the retailer at So the retailer may still have some stock, it's not all custom order, is it or there will be all prior order? Just put it in, potentially there is some stock but as Limited as possible. Alright. Because. This is a more bespoke program. No, we have car configurators on the web. So, the purpose is that you put your own car together with or without the help of the retailer and then you come into what we call a concierge process. Where you get support either via telephone or via mail or via check. Where we guide the customer further if he or she elects not to go to the retailer. We can we can help to to the customer to put the car together. Those people are sitting where we are in our headquarters. And by that, we have customer order production, tailor made because the customer can't really make the car he or she wants. There is no stock at the retailer, what we have to get used to and that's new in the United Stage that you have to wait two or three months for your car. Which is not unusual in Europe, right? No, it's very usual in Europe. Right. Americans do these strange impulse buys. And you buy whatever is the nearest match to your dream car. Mm-hm. It's a very different expectation. Yeah. Europeans want exactly the right car. Exactly and what. We're going to try it. We do it already with more exclusive cars, like the [UNKNOWN] cars because. Customers really want to put that car together. But now we are going to do it with somewhat higher volume cars like the V90. And this is a huge step forward. And I think that applies also to all the changes which are happening in society and the way people start to buy cars. How about factory delivery? Will that be an option as well? That's another one, because we have a well-known overseas delivery program. Where you order the car You go and pick it up in Sweden. Get a nice tour in the factory and enjoy the delivery process. Then make a tour in Europe. You go to whatever town you want or city you want. Leave the car wherever you want and we'll take care about the shipment back to the US. So this new ordering program, where did it come from? Is this about- Starting to move the entire Volvo sales process in the future to something more like that? Or is this something that is just a more efficient production process for you internally? No, I think its a combination of. We all know that the business model is highly under pressure. It becomes more and more difficult to make money also for the retailers and For the OEM's. Because the price are set by the markets. And the costs are simply increasing. So, having less stock at a retailer. Or for us, at the harbor, is an instant benefit. Combine that with that customers are getting used to online buying. They're getting used to buying cars online. Sure. So what we are trying to do here is we're trying to combine a few things where it should be a win-win situation. And Cadillac's been getting a lot of guff though, from some of their dealers with Project Pinnacle, that says the lowest volume will go to almost this model. You won't have any inventory. Yeah. And the customer will order digitally and we'll use you for delivery. But their motivations were different than yours if I understand this correctly. What you're trying to do is different and for a different reason, if I make it more bespoke. Yeah, exactly. We're trying to advantage. The biggest benefit goes to the customer because they can order the car they really want and they can do it in whatever way they want. So we don't force them anymore to go to the retailer other than Closing the sale will always take place because of- Cuz that's the process. That's the process, exactly. That's the franchise law scenario for now. And we are perfectly okay with that. That's interesting. Now the XC90, the S90 The V90 and then the Cross Country, all great looking cars. When can we expect things to get a little bit smaller, maybe a little bit more affordable? When can we see that new design language pushed down the range a little but? Yeah, this you can imagine this design language will be pushed down further the line. I hope so. And we have said that during 2017, we will launch two new Crossovers We will launch the successor of the XC60 and we will launch a small SUV, the XC40. And of course we are very excited about that because the SUV, especially in the United States, is booming. So we have- Will we also see a new smaller wagon that carries over the look of the 90s? Or are you done with wagons, just the top end? No, no. Absolutely not because wagons in Europe are extremely popular. And we'll get some other wagons here. Absolutely. And I strongly believe that there is a wagon potential [CROSSTALK] [CROSSTALK] Please. [LAUGH] Of course, we were so close to wagons. Wagons are so much the history and the heritage of Volvo, so I don't think we will ever give up wagons. In whatever format. High wagons, low wagons, because there will be a variation on it. Yeah. I mean, going back to the 1800s you stuck a stake in the ground with that gorgeous GT Sportswagon, and no one's ever forgotten that way that you can make a wagon so long and lean, even though it wasn't a very large car. But the proportions were like no other wagon ever made, if you wanna call it a wagon. And then we used all those design languages and forms on our new cars, the V90. And that's why we believe that the V90 is probably The best looking sports wagon on the road in the world. No argument here. But I'm not totally biased. No, I don't think we can argue. I think we're both pretty smitten by the new design language and we're really eager to see where it lands next. So congratulations on some great announcements and being basically at the very front Of autonomy in the real world I am impressed. Yeah and you know why, because the autonomous drive is part of our vision 2020. That we don't want anybody to be killed or seriously injured by 2020. An autonomous drive is a tool, is an essential tool for us. To reach that goal. Then of course, there are all the convenience factors. But we strongly believe, like in the United States, that it cannot continue with all the technology available in the world. That 35,000 people get killed. Right. In road traffic. And it's because of distraction. It's because of other rules. And we have all the technology in the world in a few years to take that away. And some would say we had the technology now to reduce that by maybe 10,000, or by the end of this year, let's say. As imperfect as autonomous technology is, what is it about the public's lack of sympathy for autonomous technology that will have hiccups at first? Do we have to It seems like we have to get it perfect or they will reject it. What we talk about is a revolution in the automotive environment. And revolutions always do not come natural. It's always a little bit uncomfortable when you make dramatic changes. And I see on the internet those polarized discussions about I want to drive myself but that's not the issue. It's a choice. It's a switch. Yeah. You're just adding choice. And That doesn't seem to get communicated, we're adding more choice, it sounds like we're moving you to something new, when in fact we're just giving you more. Exactly, because in certain circumstances nobody can tell me that you when you drive in LA or New York you enjoy driving, when you're just queuing up. That's where this technology is very convenient. And when you drive on a very nice road you drive yourself. We don't have to make that choice. It's like a cruise control on or off. Before we let you go, what are you driving these days? I'm currently driving a V-60 pulse car. Okay. But I'm going to switch as soon as the first V-90 is entering America. Entering American soil, I will switch over. Okay, we've got a wagon man amongst us. Alright. Absolutely. We got three wagon guys. Yeah. We're gonna sit here and talk lighters all day. We could switch cars. [LAUGH] Lex, thank you for joining us again. Pleasure. Appreciate it