Volvo ponders adding two small vehicles

NEWBERG, Ore.--Among the first product moves that Volvo is considering as it adapts to new management is the addition of a small sedan that targets BMW's 1 series and a compact crossover to go up against the BMW X1.

The sedan would be smaller than the S40, said Doug Speck, CEO of Volvo Cars of North America. The S40 will be phased out in the next two years because it is regarded as too close in size to the redesigned S60 sedan.

"We need enough gap in size to justify small and large vehicles," Speck said at the press launch of Volvo's new-generation S60.

Volvo wants a small crossover because "there will be more X1 counterparts in the luxury segment," he said.

New CEO Stefan Jacoby is driving the product assessment at Volvo, which was acquired this summer by Zhejiang Geely Holding Group Co. of China.

Larger vehicles also figure in the plan. Speck said the aging S80 sedan and XC90 crossover will get their own platforms when the vehicles are redesigned in the next two years.

"We need to do something about each of those new products," Speck said. "The large S80 sedan segment is very big in China, and that range of sedan is even more critical for all the luxury brands than it has been five years ago."

The small crossover also would help fill the gaps created as Volvo discontinues station wagons in the United States, Speck said. The V70 wagon won't be sold after the 2011 model year. The smaller V50 wagon will be axed from the lineup within two years when Volvo drops the S40, he said.

"The luxury station wagon segment has been on the decline over the last decade, and we have adjusted our product lineup with the XC products," Speck said.

As part of Ford Motor Co., Volvo used three distinct vehicle platforms. Now, Speck said, Volvo may need only two platforms--large and midsize--for its entire product range.

"The key to any car business is you can't afford to have too many platforms and need cost efficiencies to compete," he said. "Ford had a base plan for Volvo, and they do not own us any longer."

Speck expects annual U.S. sales of 15,000 to 25,000 units of the S60, which goes on sale this month. Last year Volvo sold 5,895 S60s, down from 8,966 in 2008. The S60 has been given fresh styling and new luxury features to position it better against the BMW 3 series, Mercedes-Benz C class, Lexus IS and other import sedans.

Jacoby, former CEO of Volkswagen Group of America, also has launched a review of U.S. strategy that probably will last several months, Speck said.

He said Jacoby will come to the United States in October to meet with U.S. dealers and discuss the brand's strategy. The dealer product committee will travel to Sweden next month to meet with Jacoby.

(Source: Automotive News)