History of Volvo
In 1927 Volvo Personvagna, a small company that would become Volvo Cars, Inc., was founded in Gothenburg, Sweden. Over the years, it earned a well-deserved reputation for providing safe, reliable transportation. Volvo boasted one of the highest customer loyalty rates in the industry for decades, with customers consistently choosing Volvo when purchasing a new car. This dedication was the envy of other companies in the automotive industry. In fact, it can be said that Volvo’s reputation for safety and reliability was a primary factor in the actions of other companies over the last 20 years spending more resources for safety enhancements. In sum, these companies saw that "safety sells".
After being purchased by Ford Motor Company in 1999, Volvo became a larger producer by volume. Despite this, Volvo remains relatively small compared to BMW, Mercedes, Acura and Lexus, but competes with all of them for the same customers.
How the Global Economy and Free Trade May Affect Quality
In 2007, the Global Economy and Free Trade have made business more competitive, especially in manufacturing. The struggle for Volvo is to reduce costs while maintaining its reputation for safety, comfort and reliability in the New Millennium. To survive, Volvo must sell cars in an increasingly competitive market while at the same time promising to do more for its customers. It is not an easy task, especially considering the financial woes of Ford Motor Company itself.
Economic Pressures to Reduce Warranty Costs:
The need to lower costs includes outsourcing of production, reducing research and development costs, shortening product cycles, and most importantly for this site, streamlining warranty claims in ways that reduce reimbursements to dealerships, which often adversely affect how claims are handled.
How Warranty Claims Are Handled
Years ago, the efforts of a dealership repairing a car under warranty were paid for by the manufacturer and largely unchallenged. Today, warranty policy across the industry is completely changed, and is now geared towards reducing all costs. Volvo will only reimburse a dealership (and its mechanics) for time spent repairing verified mechanical concerns. Some nominal diagnostic time may be billed for unverified concerns, but the amount is arbitrary compared to the effort that may be expended.
A verified concern is a problem that has been duplicated and observed by a factory trained mechanic. Everything else is a "could not duplicate" item, in other words, a fancy way of saying "your car was not fixed".
Warranty claims by dealers are audited by Volvo on a regular basis to avoid overcharging. Claims that are not verified are charged back to dealerships. (Note: This may also be true if repairs are made more than once for the same problem that was paid for under warranty).
The policy requires a dealer to strictly adhere to the warranty guidelines, even if it means that problems are not repaired. Under this cost-cutting, any incentive a mechanic has in spending time and effort locating a difficult problem, evaporates. A mechanic actually loses money if duplicating the concern is an issue. It is far easier to focus on the known service items such as tune up or brake replacement, where the mechanic is certain payment will be made for the work undertaken. This is entirely understandable. How many of us would spend time at work each day undertaking tedious tasks knowing that it would be uncompensated?
Warranty versus Warranty Reimbursement:
What’s the difference?
The warranty on 2007 Volvo’s, similar to earlier language, provides for repairs without mention that only verified concerns will be repaired, and without explaining how warranty claim policy might affect whether your car will receive the attention that the warranty guarantees.
Volvo is only one of the manufacturers using this method of warranty claims handling, yet in ways specific to Volvo, the effect of this cost cutting is to undermine the very reputation for reliability that Volvo has spent decades earning and enjoying.
If you have seen "no problem found" or "could not duplicate customer’s concern" on a repair invoice, the policy has affected you.
If anybody at Volvo is reading this, perhaps it will shake the tree in Gothenburg, Sweden to dedicate more time and effort to make repairs correctly the first time when cars are returned to the dealership under warranty.