There is an old rule that economists follow: In making a forecast, give a number or a date—but not both. It is a rule that executives in the auto industry ignore with surprising frequency. In instances involving Volvo and Tesla TSLA -1.82% , two companies whose names are seldom spoken in the same breath, the lack of caution in setting future sales targets may cause them more trouble than a mere fender bender.
After years of drift, Volvo Cars is trying to rebuild its product line under its Chinese owners Geely Motors. No longer content to be solely identified as a maker of boxy station wagons, Volvo has set its sights on becoming a full-fledged luxury manufacturer—on the same level as the industry’s top producers.
Its goals are ambitious, aggressive, and yes, audacious. Leading the effort to reach them is CEO Håkan Samuelsson, who came to Volvo from Munich-based truck maker MAN in 2009. In an interview with Automotive News, Samuelsson set unexpectedly steep targets for Volvo’s recovery. Among the highlights:
• A return to annual U.S. sales of 100,000 plus by 2016;
• Arrival in the “elite pantheon of global luxury brands” in three to four years;
• Achievement of 800,000 in global sales in 2020.
If Volvo can hit just one of those targets, Samuelsson would be honored like a Norse god back in Sweden where Volvo’s headquarters remain. But even with Geely’s backing, Volvo doesn’t have the scale, depth, or wherewithal to make a serious challenge to the industry’s upscale leaders. Competition in the car business has only tightened in the past several years while Volvo has been sidelined, and it is starting anew from well back in the pack.
While Volvo’s targets have mostly been set out of the public eye, the same can’t be said about the sales goals facing Tesla Motors. CEO Elon Musk might as well have tweeted his to the world at large. From around 20,000 cars sold last year, he has let it be known that he wants to be selling more than ten times that number—250,000—in the U.S by 2020, and 500,000 worldwide. We’ll take a longer look at his chances further on in this column.