Automotive News - May 6, 2019 - Retail - 41

MAY 6, 2019 * 41

Volvo's mission: Building a greener car
Automaker in search of new suppliers, fresh ideas
Douglas A. Bolduc
dbolduc@crain.com

Volvo is looking for innovative suppliers to
help it achieve an ambitious sustainability
goal. By 2025, the Swedish automaker wants at
least 25 percent of the plastics used in every
newly launched Volvo to be made from recycled materials. The figure now is about 5 percent.
To determine whether it could reach this target, Volvo worked with its current top-tier suppliers to create a variant of the XC60 plug-in
hybrid in which 20 percent of the plastic components were replaced with equivalents containing recycled materials. Volvo is testing a
number of those 170 components to determine which might make it into future models.
"We are having a lot of discussions with our
Tier 1 suppliers, but we are not stopping

there," Martina Buchhauser, Volvo board
member for procurement, told Automotive
News Europe. "To speed up this process, we
are also talking to the chemicals and raw materials suppliers. And, to be even faster, so
that we can begin testing even earlier, we are
inviting new partners to help us innovate together on recycled materials or materials
from renewable resources."
To find these suppliers, Volvo held a Sustainability Day in October where it not only invited
its Tier 1 suppliers but also opened the event to
a new breed of component maker. In addition,
it is working with nongovernment organizations to identify companies that have fresh
ideas to increase the sustainability of the parts
that enter future cars.
"We at Volvo believe that collaborators win,"
Buchhauser said. "Therefore, we need people

around us who can help us and co-create with
us on this plastics ambition. That is why it is
important to address this to a broader audience."
Volvo is already asking for quotes on recycled
plastics for vehicles that will be based on its
SPA2 architecture. SPA2 will debut with the
launch of the third-generation XC90 in 2021.
"We have translated the ideas into our specifications and into our sourcing process," she
said.
The increased use of recycled plastics is just
one way Volvo aims to minimize its global environmental footprint. The automaker has
promised to eradicate single-use plastics
across all its premises and at all its events by
year end. In addition, in January, Volvo's engine plant in Skovde, Sweden, became its first
climate-neutral facility. By 2025, it wants all of
its manufacturing operations to achieve the
same goal.

SONIC

continued from Page 4

Sonic expects to open another
EchoPark store in Texas by the end of
2019, according to a regulatory filing.
It also plans to add EchoPark stores
by the end of 2020 in the Atlanta, Los
Angeles and Florida markets, Dyke
said.

NISSAN

'Opportunities for
the new Frontier'

continued from Page 4

continues scratching for a piece of
the market.
"I see a lot of opportunities for
the new Frontier that we're working on," Valls told Automotive
News. "From there, we can leverage
much more truck strength and
presence, and use it to support Ti-

TOM WOROBEC

This Denver store is one of Sonic's three EchoPark locations in Colorado.

An EchoPark store in San Antonio
moved late last month from a spot in
the southern part of the market to a
location in north San Antonio, Dyke
told Automotive News.
"We just found a better location,"
he said.
Dyke said an additional EchoPark

tan's further growth."
In his previous post as chairman of
Nissan Latin America, Valls shepherded the construction of a factory
in Argentina to produce a new-generation Frontier for Latin American
markets. That version of the truck is
still unavailable in the United States,
where Nissan has allowed the current U.S.-built Frontier to age for 14
years without a redesign.
"It's got some years," Valls said dryly of the aging pickup.
"But I think the new Frontier we're
working on is going to be a game

store is scheduled to open this year,
but Sonic has not disclosed the location or timing.
"We'll open a couple of more markets next year," Dyke told the analysts. "If you think about Atlanta and
the size of market that is, you think
about the L.A. market, you look at

Additional stores

Buchhauser said Volvo is taking these steps
not only because "the world needs this," but also because it makes good business sense. "Our
customers want us to be there." a

the Florida markets, whether it's Fort
Lauderdale, Miami, you look at Orlando, and you look at Pittsburgh,
Pa., Philadelphia, Pa. - there's just a
ton of opportunity."
Sonic may add a second Dallas location for EchoPark, Dyke said. Existing franchised facilities in the Los
Angeles market also could be used
for an EchoPark store. Sonic also found a location in
the Atlanta market and
could open an EchoPark
store there in the first quarter of 2020.

EchoParks selling
in 121 markets

EchoPark's store in Grand Prairie,
Texas, in March sold about 1,600 vehicles and made more than $2 million, making it the most profitable
store in all of Sonic Automotive for
the month, Smith and Sonic President Jeff Dyke said on the call with
analysts.
And EchoPark, which operates
three stores in Colorado, four in Texas and one in North Carolina, has
sold vehicles to customers in 121
markets across the U.S., with some
shoppers traveling hundreds of
miles to buy a vehicle, Sonic said.

In support of the UN Environment's Clean Seas
campaign, Volvo created this XC60 T8 plug-in
hybrid with more than 170 parts made with
recycled materials.

"I think this strategy
will help the Titan. It's
tough. But the Frontier
will help us to get to
the ambition I have in
this segment."
Jose Luis Valls, Nissan

changer for us - a game changer for
the Frontier, but also for our whole
pickup strategy. We need to have a
broader approach to how we build

wrote in a note to investors last month.
But he noted that he's looking for evidence of sustained profitability in new
markets "before getting constructive
on the stock."
Jefferies analyst Bret Jordan, in a
note to investors following earnings,
said as EchoPark grows, its used-retail segment margins are likely to
drop.
"We believe EchoPark
could expand profitability
longer term with improved
inventory procurement, as
roughly 90 percent of the vehicles are currently purchased at auction - a
Stock reaction
somewhat inefficient source
Analysts were pleased by
of supply and contributor to
EchoPark's growth. Bank of Dyke: "Ton of
limited profits at the frontAmerica upgraded the opportunity"
end sale," Jordan wrote in
stock to a buy from neutral
in a note to investors the day after the note.
Sonic, of Charlotte, N.C., ranks No.
Sonic released earnings. Sonic
shares surged by 25 percent over two 5 on Automotive News' list of the top
150 dealership groups based in the
days in late April.
Some analysts, however, are wait- U.S., with retail sales of 122,717 new
vehicles in 2018. It retailed 139,605
ing for more results.
"We are encouraged by the swing to used vehicles for the same period,
profitability at EchoPark with all stores ranking it No. 6 on Automotive News'
profitable in the month of March," Rick list of the top 100 dealership groups
Nelson, an analyst with Stephens, in used-vehicle sales. a

pickups for different uses.
"I'm working personally on this,"
he said. "And I think this strategy will
help the Titan. It's tough. But the
Frontier will help us to get to the ambition I have in this segment."
Valls declined to say when the new
Frontier will appear in the United
States. It will be manufactured in
Canton with the Titan. Even though
the Frontier occupies the same segment as Nissan's globally popular
Navara pickup, the Frontier is instead built on the architecture of the
Titan, and the next Frontier will re-

main on that architecture.
Pressure is building on Nissan in
the U.S. midsize pickup segment.
Ford has returned after a long absence with a new-generation Ranger.
And Jeep is introducing the Gladiator.
Valls declined to tip his hand on
Nissan's product plans. But he said
the next Frontier "will bring a lot of
global technology into the one-ton
pickup market.
"Options are on the table," he said.
"What I know is the kind of truck I
need." m

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