Twenty years ago Volvos could be summed up in three words: safe, spacious and smug. The company sold big estate cars to antique dealers and middle-class families who felt good about taking their offspring around in the biggest, safest car they could find.

Today, every car is safe and there are lots of premium estate cars (until the 1980s BMW and Mercedes would not touch anything as common as an estate car). That makes Volvo's life harder, but now it is coming under threat from an unexpected quarter. The sort of people who used to buy Volvos are now buying Skodas.
Let me explain. Last year, Britain's second biggest selling medium estate (that is Focus/Golf sized) was the Skoda Octavia, just behind the Vauxhall Astra. Meanwhile the Skoda Superb estate sold more than the estate versions of the Renault Laguna, Citroen C5 and Peugeot 407 combined. When looking for a sensible, no-nonsense estate car, the first place many people look is now Skoda. In fact the first place many people look for hatchbacks is now Skoda – overall the company sold 45,000 cars last year, ahead of both Fiat and Volvo.

Skoda proves yet again the first rule of the car business – it can answer the question, "What is this car for?" Everyone knows what a Skoda is for – sensible motoring at lower cost than mainstream brands. Just like everyone knows what BMW is for, even if some people don't particularly like it. Now go back to Volvo. What does that stand for? Well, we know what it used to stand for, but what about today? It's sort-of premium, it's not German and, er, that's about it.

It could stand for Scandinavian design (like an upmarket four-wheeled Ikea), but most people would define it in terms of what it isn't rather than what it is. It isn't like Vauxhall and it isn't like BMW. As Skoda shows, the trick is to find a distinctive place in the market and then make cars that really fit that position. When Skoda says its cars are "Simply Clever" it isn't just an empty phrase. It means they are not too complicated, but they have lots of features that owners really appreciate (from big issues like reliability to little ones like the clever little bottle-holders on the new Citigo). This would have sounded mad 20 years ago, but Volvo really could learn a lot from Skoda.