Volvo's Yuan Xiaolin: Hope safety becomes a universal value in the entire industry

Author | Wang Xiaojun

Editor | Zhou Zhiyu

Since the beginning of this year, "safety," which was originally a baseline dimension for the automotive industry, has become particularly subtle. Each car company has made safety an important part of their presentations, even holding dedicated press conferences for safety.

For Volvo, which has long been deeply associated with the safety label, there are different answers regarding safety.

Yuan Xiaolin, President and CEO of Volvo Cars Asia Pacific, believes that "safety is not a selling point for us; it is a belief." Because safety is not a capability of a single dimension, nor is it the application of certain parameters or technologies, but a systematic capability.

This can also be seen from the launch of the all-new S90 by Volvo. On May 29, the all-new S90 was officially launched at the Volvo factory in Daqing, Heilongjiang.

At the press conference, Volvo comprehensively showcased the molds for components and the fully transparent casting process of the S90. Whether it is the seats or airbags, the overall body structure or a small welding point, Volvo seems to be able to detail its efforts in safety very thoroughly.

In terms of physical safety, features such as the cage body, wheel loss protection design, and WHIPS head and neck protection system serve this purpose.

In terms of intelligent safety, the Pilot Assist system can be activated at speeds of 0-130 km/h, and the City Safety system can effectively reduce or avoid the risk of collisions with vehicles, pedestrians, cyclists, and large animals throughout the day. Additionally, features like the BLIS blind spot information system, intelligent avoidance of oncoming vehicles, and EMA emergency avoidance assistance all serve safety.

As we all know, the current automotive industry is highly competitive, with constant verbal battles. At press conferences, parameters and prices often ignite a frenzy. Moreover, sometimes, some car companies may not have their own strengths and tend to promote whatever dimension is currently popular.

In contrast, Volvo consistently focuses on safety and aims to present a transparent and complete safety system that aligns with corporate operational norms and does not lead to user misunderstandings.

Take the AEB (Automatic Emergency Braking) system, which has been a competitive focus among various companies in recent years. Volvo believes that achieving "high-speed braking at 100 km/h" is not technically difficult, but the risk of secondary collisions brought about by high-speed braking is often overlooked; merely emphasizing sensitivity and pursuing so-called "full-scene braking" is not difficult, but the probability of phantom braking due to false triggers also significantly increases.

Volvo emphasizes that the AEB false trigger rate is no more than once every 220,000 kilometers because what AEB truly tests is not extreme parameters like high-speed braking at 120 km/h, but how to achieve a dynamic balance between "effective triggering" and "eliminating phantom braking," mastering the timing and intensity of intervention In the current second half of the industry's intelligence, especially as the safety of intelligent assisted driving is being re-evaluated, Volvo believes that understanding intelligence also involves a breakdown to gain insights into users' true needs.

According to Yuan Xiaolin, intelligent functions can be roughly divided into "functions that affect driving" and "functions that do not affect driving," with the latter being more related to entertainment, communication, and information connectivity.

For functions that "affect driving," it is essential to ensure that any function that can be practically applied in this area must possess a high level of reliability. Volvo insists on not handing over unverified technologies to users.

For functions that "do not affect driving," it is necessary to consider that when the noise eventually subsides, consumers will return to rationality and think about whether this function is truly needed.

Yuan Xiaolin believes that these new functions in the digital age will gradually form a "consensus" within the automotive industry. This consensus is not only a cognitive agreement but also a consensus on solutions, which is becoming increasingly clear.

As a global automotive brand, the cars produced by Volvo must meet regulatory requirements worldwide. It is worth mentioning that Daqing in Heilongjiang is the exclusive production base for the Volvo S90. To produce models that meet global safety standards at a single base, Volvo has maintained a globally unified standard since establishing its local factory in China, creating ultra-high standards applicable worldwide.

In response to the current market competition, Volvo is also making some changes. This time, the manufacturer's suggested starting price for the all-new S90 is 300,900 yuan, which is a direct price reduction of 100,000 yuan compared to the previous version.

Although the suggested price for the all-new S90 has been lowered, Yuan Xiaolin stated that safety is Volvo's belief. "Even in the face of intense industry competition, Volvo will not survive by sacrificing quality and safety. If we survive by such means, then we are no longer Volvo. In fact, when such a compromise decision is made, it has already announced the death of the brand."

Currently, Volvo is also navigating through cycles alongside many joint venture brands. However, as a company with a history of over a century, Volvo has witnessed various industry cycles and has long adhered to the bottom line of safety in the industry, possessing greater resilience to navigate the current cycle.

The following is a dialogue between Wall Street Insights and Yuan Xiaolin (edited):

Q: What dimensions does Volvo's safety system specifically include? How does Volvo address the new safety challenges brought by software-defined vehicles, such as information security and algorithm reliability?

A: Volvo advocates "safety," and I prefer to describe it as systematic safety. It is not merely about certain parameters or the application of certain technologies. While parameters are important and reflect the level of technological development, they do not equate to an overall enhancement of capability and can often lead to misleading generalizations.

The safety system is based on real traffic safety needs. We need to grasp real scenarios, integrate various corresponding technologies, and form an effective system through long-term accumulation and repeated verification. Therefore, as a manufacturer, we must play the role of integrator, using our calibration, matching, and calibration capabilities to integrate various seemingly dazzling parameters into a safety system that truly protects lives In fact, we can proudly say that Volvo's "safety system" means that when you sit in a Volvo car, it can provide the maximum possible safety available today.

Digitalization is a gradual process. In facing the challenges of the new era, Volvo has always maintained a humble, open, and inclusive attitude.

Regarding the privacy and data security of car owners, as a century-old enterprise, we have always placed people at the core, thus holding ourselves to the highest global standards.

Q: The price war is fierce now. Volvo focuses on safety, but there may be a conflict between safety and cost. How to balance cost, pricing, and brand value in market competition? What does Volvo pursue more, quantity, quality, or values?

A: The survival and development of an enterprise must be based on values. Many companies view vision, mission, and values as slogans on the wall, but for Volvo, values are the core guidance in responding to market challenges.

Since entering the Chinese market, safety has always been Volvo's core strength in market competition, as well as the experience and capability to integrate these technologies. Even in the face of intense industry competition, Volvo will not survive by sacrificing quality and safety; if it does survive, it would no longer be Volvo. In fact, when such a compromise decision is made, it has already announced the death of the brand.

Through the hard power of products and systematic capabilities, we convey the message of "trustworthy, attractive, and value for money" to the market. Quality and quantity complement each other. Quality is the premise, but quantity is also important under the assurance of quality. "Quality" is achieved through understanding standards, grasping data, controlling processes, and inspecting quality throughout the entire value chain to calibrate a product that meets Volvo standards. "Quantity" is the foundation of commercial sustainability, but shortcuts cannot be taken for the sake of "quantity."

In addition to the integration capability of product technology, we must also possess commercialization capabilities. Product pricing is essentially determined by the relationship between supply and demand, rather than simply depending on costs. The premise of healthy enterprise development is that prices cover costs, including tangible and intangible costs such as materials and operations, and achieve profitability to support R&D investment and product iteration. This is a basic requirement for a company to develop healthily.

Q: What is your view on the strategies and thoughts behind these pricing decisions? More and more car companies mention that "safety is the greatest luxury." In the era of automotive electrification, has Volvo's perspective on safety, as an authoritative representative in the field of automotive safety, changed?

A: Price is actually the result of the interplay between supply and demand, brand value, and market feedback. The market's response will prove the true value of the product, which is not determined by what price can be set, but rather a natural fit of supply and demand. Its essence is positioned by the market, and what enterprises need to do is to strengthen product and brand strength, maximizing the benefits of matching products with prices.

Safety is our value, and it will not change in any era. Of course, with technological development, the concept of safety continues to extend, covering areas such as battery safety, data safety, and intelligent driving safety, all of which are included in Volvo's safety system Question: In the era of intelligent connectivity, the transformation of traditional joint venture car companies is likened to "an elephant turning around." What are the strengths of the Volvo system capabilities? How does Volvo ensure that its products meet or even exceed consumer expectations through system capability construction?

Answer: The high quality of the Daqing factory comes from globally unified standards, and this capability runs through the entire process of product planning, technology integration, and commercialization. From the very beginning of our product planning, we clearly set "industry-leading" goals, which are supported by specific technical indicators and solutions, not just empty slogans.

How can we best describe system capability? I would like to give an example: when selecting ingredients at a market, the dishes presented by a Michelin-starred chef and a street restaurant chef will be vastly different. The former uses professional techniques, control of cooking time, and flavor pairing to elevate ordinary ingredients to a star-level standard; the latter, while having its own characteristics, is constrained by experience and standards, making it difficult to break through its positioning boundaries. The gap between the two is essentially a difference in the hierarchy of system capabilities, not the quality of the ingredients, but related to the depth of understanding of cooking and the accumulation of experience.

This difference is also significant in the automotive industry. Volvo's systematic capability lies in ensuring that the technical resources of first-tier and second-tier suppliers are aligned with product quality and brand positioning through selection, matching, targeting, tuning, and business capabilities.

The essence of an OEM is not simply to assemble supplier components, but to build an irreplicable advantage with a clear value system, deep historical accumulation, and solid Know-How; focusing on the three core areas of "product, brand, and system" allows consumers to choose Volvo not just because of a specific safety feature, but because of the reliability of the entire process from R&D to production, from technology to service, and this reliability is the core capital that transcends market cycles.

Question: Volvo has been researching intelligent driving for decades. What is Volvo's rhythm in terms of intelligence?

Answer: The overall development of intelligence in the Chinese automotive market is synchronous. Intelligent functions can be roughly divided into "functions that affect driving" and "functions that do not affect driving," with the latter being more related to entertainment, communication, and information connectivity.

However, for "functions that affect driving," we must always ensure that any function that can be practically applied in this area must possess a high level of reliability. Volvo insists on not handing over unverified technology to users. Volvo will never create misunderstandings for customers; in our promotion, usage, and application, we ensure that customers perceive our products as solid and reliable. Any area related to life safety must be approached with great rigor and caution.

We need to ask ourselves a question: "What value does it actually provide us?" Buying a car is a significant decision for users; if our technology is not proven reliable through repeated and scientific validation, why would users choose to pay for it?

The noise will eventually fade, and consumers will return to rationality, pondering: Is this function something I truly need? Should I pay for this function? To what extent does it exceed my experience expectations? How frequently will I use these displays? What potential threats does light pollution pose to me? In the digital age, the automotive industry will gradually form a "consensus," which is not only a cognitive consensus but also a consensus on solutions, and this consensus is becoming increasingly clear Moreover, don't forget that the automotive industry is also a business field that must follow commercial rules. When the cost of car manufacturing is relatively constant, if you want to increase investment in a certain area, it will inevitably reduce investment in other areas; this is a process of trade-offs.

The standard for Volvo's trade-offs is safety and health. We will not compromise on costs regarding quality or core safety considerations.

Q: The market competition is very fierce now. Some companies pursue quantity, some pursue quality, and you mentioned the hope to become a universal value practiced by the entire industry. In the process of operating a business, how do you perceive the weight of these factors?

A: There is no standard answer to this question. "Quantity, quality, and values" need to be dynamically balanced, and values serve as the guiding principle for trade-offs.

First, adhere to dynamic balance. The market used to be characterized by "high prices making it hard to find buyers," but now it is "price reductions leading to poor sales," which indicates that relying solely on price to drive sales is a misconception. Simplifying market competition to a "price reduction logic" is clearly not advisable. The essence of business is sustainability, which requires establishing a healthy cycle among cost, pricing, and value.

Second, make balanced trade-offs. Business operations must involve trade-offs. Industry standards are merely the baseline, but excellent companies need to exceed that baseline, balancing flashy product features with overall safety; when facing emerging technologies, an open attitude should be maintained, but it must be under the premise of "not increasing safety risks," rejecting "inhumane" innovations.

Regarding the hope that the entire industry adopts safety as a universal value: when thinking of one's family, no one denies the importance of safety; but when safety does not concern oneself, can a company still adhere to the highest standards? For us, safety is not just a selling point; it is a belief. We hope that Volvo's concept of safety is not unique or singular; rather, it is a universal value that the entire industry practices together.

For Volvo, we not only regard safety as our core value but also share the concept of safety, safety data, and safety technology with society as a whole. To this end, we not only made our seatbelt patents public but also initiated the "E.V.A. Safety Equality Action," opened a central digital library, shared safety data with the entire industry, and emphasized the idea that everyone is equal in the face of safety.

Q: How do you view the duration of a company's ability to traverse market cycles? What standards must be met for the electrification transformation to be considered a successful cycle traversal?

A: Market downturns are not unique challenges of the present; even during the golden age of automobiles, there were fluctuations, though the definitions of those fluctuations may differ. Companies are always in a dynamic adjustment process, much like playing cards—the key is not the quality of the cards but how flexibly one responds.

The essence of traversing cycles is the adherence to values and the process of dynamic adjustment. In favorable conditions, the industry generally profits, and the differences between companies are not significant; in adverse conditions, the true test of a company's value trade-offs and strategic determination emerges.

In the short term, we focus on the health of each operating cycle. In the long term, we place greater importance on the sustained construction of a century-old brand. The true standard of success is whether a company can transform short-term challenges into long-term development momentum while maintaining determination amid industry fluctuations Question: In the current transformation process of the automotive industry, competition is particularly fierce. How will Volvo leverage the Chinese market to enhance its competitiveness?

Answer: In fact, the automotive industry has developed to this point through market accumulation, technological advancement, and the scale of the entire Chinese industry. The Chinese automotive industry possesses tremendous potential and possibilities, especially during the transformation characterized by digitalization and electrification, which shows an accelerating development trend. This also provides companies with strong systemic capabilities in the Chinese market with more opportunities. Whether or not to seize this opportunity is a test faced by every company and brand.

For local Chinese enterprises, they can face the global market and establish brands that shape a clear, human-centered, and respected brand image. However, there is no easy path; each path requires solid effort and persistence, and must be consistent and coherent, not just about telling stories.

International enterprises represented by joint ventures, many have left this land, but this does not mean these enterprises cannot survive; it is a choice made by the enterprises themselves. Not every company has established local factories and a complete system including design, R&D, procurement, and sales in core global markets. Companies like Volvo, which choose to establish local factories and a complete system in China, are clearly recognizing themselves and insisting on their own foundation while fully tapping into all potential capabilities generated by the transformation of the Chinese automotive industry from large to strong. We need to make full use of it.

Volvo also has an advantage, which is our "brother companies." Our cooperation began early and is multidimensional, which is more advantageous than ordinary partnerships that rely on commercial negotiations and gradually adapt. We insist on being open and pragmatic, focusing on our strengths to create the most competitive products that align with our brand identity, achieving success in commercialization. This is both an opportunity and, of course, a challenging process.

Question: Compared to Volvo's other global production bases, what practices does the Daqing factory have in the application of clean energy and AI digital technology?

Answer: The production in the automotive industry, such as the four major processes and application technologies, is relatively standardized. However, in areas that cannot be standardized and have unique characteristics, such as painting and welding, they are closely related to safety, health, and quality. If these aspects can be done well, it requires the enterprise to have a solid layout and strength in production to apply the most advanced and suitable solutions. Volvo's Daqing factory is the first manufacturing base in Heilongjiang Province to achieve 100% carbon neutrality through electric energy, and it is also one of the few vehicle manufacturing plants in the country that implements "first-class industrial wastewater discharge standards."

In the field of manufacturing, the Daqing factory also serves as a benchmark within the Volvo system, demonstrating strong competitive capabilities and continuously trying the latest cutting-edge technologies. A product that can truly be sold globally has very stringent requirements for the comprehensive manufacturing standards of the factory Everyone knows the concept of "imported cars," which implies that the design and manufacturing standards are higher than those of domestic cars. Since Volvo established its local factory in China, our standards have always remained globally unified, creating ultra-high standards applicable worldwide. Although this is challenging, it is what Volvo has always been doing, and it is also what makes Volvo unique. For Volvo, we have "export cars." We will not adopt different quality standards in different markets; Volvo's quality standards are one and only one