“We used to sell cars to accountants, doctors, dentists and lawyers. Now we’re selling a lot of cars to young software engineers, young marketeers, because the brand attributes are reasonably understated, reasonably humble, and especially when they have children, then they care about safety more than anything else.”
A question about the future of estates (according to Rowan, SUVs have taken their place essentially and Volvo cannot and will not enter every market niche as a relatively small company. A range of around eight cars will be enough) prompts a wider response from Rowan about how the industry is in a “Darwinian event” around survival, and who can successfully transition into software-defined vehicles.
“The guys figure this out quicker are going to come out strong, the guys who stick to the knitting,” he says. “There will be people who don’t come out of this and there will be fatalities. The guys with 10-15 brands, that’s going to be super-tough. They’re going to need to pare that back quickly.”
Rowan expects a significant change in around 18 months as brands start to disappear, from legacy car makers and from Chinese upstarts.
“They’re just not all gonna survive,” he says. “There’s not enough business for everybody. A lot of them are not making money already. They’re selling cars at a loss just to keep cash coming in. Eventually, that plays itself out and you’re going to see a thinning out of the multi-brand car companies that are going to need to say: ‘I can’t keep all these brands alive, so I’m going to need to shrink.’
“I don’t think you’re going to see car companies buying car companies. There’s just not enough business for everybody. So those guys will die out. The ones that are left will be much stronger because there’s less competition, and we’re going to be forced to be pretty lean to get through this.
“Everybody’s cutting costs. I don’t think it’s a bad thing for the industry. It’s super-interesting. It’s super-competitive right now. It’s freaking hard. But at the end of the day, if you want to win in the long term, you need to go through this. The only way to take market share in a flat market is to take it from your competitor. So unfortunately, we’re not in a win-win situation. Somebody’s gonna lose.