Volvo Cars has taken a minority stake in online car retailer Carwow with the aim of improving its own digital sales and boosting its appeal on social media, as the Swedish brand aims to sell half of its cars online by 2025.
London-based Carwow is the largest web platform for new car sales in the UK, Germany and Spain, and has a large following on YouTube with close to 7mn subscribers.
“This is a way for us to learn and accelerate our online transition,” Magnus Fredin, head of Volvo’s online business, told the Financial Times.
The investment from Volvo’s tech fund is in the tens of millions of pounds, according to a person with knowledge of the transaction. The fund, which has previously invested in battery group StoreDot, typically takes small stakes of up to 10 per cent in a business.
Volvo sells roughly one in ten of its new models purely online, which the brand wants to raise to half of all cars by 2025.
As well as learning about customer behaviour online, Volvo also wants to emulate Carwow’s success with video, through which it attracts 70mn views monthly to the YouTube channel that features a mix of in-depth car reviews and drag races.
The business was launched in 2009 as an aggregator of reviews, but morphed into offering an online sales platform, a marketplace, and producing its own highly successful videos.
Although Volvo’s most-watched video, about female crash test dummies, has 24mn views, the brand’s YouTube channel has only 185,000 subscribers, compared to 6.95mn at Carwow, according to numbers from YouTube.
“It is important to stick out in the world today,” said Fredin. “We need to adapt the content of what the customers are looking for.”
As well as appealing to new customers, Volvo also wants its videos to offer information, particularly to motorists looking to buy an electric car.
The company is also hoping to understand how consumers shop online for cars, and how much of the process they are willing to do digitally compared with at a traditional showroom.
Roughly a third of motorists begin searching on independent websites like Carwow rather than on specific car brand pages, Fredin added.
“Customers are intrigued by having various parts of the process online, but when doing a test drive they want to do one at a retail location. This is not about sidestepping the retailers, it’s for us co-operating with a platform with customer needs that we can learn from.”
The pandemic, which led to car showrooms being forced to close for periods and spurred some retailers to launch “click and collect” services, accelerated the shift towards online transactions.
“If you look before the pandemic, 95 per cent of [buying] journeys started online,” said Fredin. “What changed is that during the pandemic customers became more willing to transact online.”