The Crank: Can Volvo become a true luxury brand under its new Sino owners?

By John LeBlanc It took a few years, and a big drop in the original asking price, but Ford finally was able to foist its perennially money-losing Swedish Volvo brand onto China’s Zhejiang Geely Holding Group Co. this past summer. So where does Volvo go from here? Right now, Volvo, along with the likes of demi-luxury brands like Acura, Saab and Lincoln, is in that dreaded middle ground in the market—not really mainstream, but also not perceived in the same light as blue-chip luxury brands like BMW, Audi, ‘Benz and Lexus. But not for long. Apparently, Volvo’s new Sino owners want to take the brand both up- and down-market, and ditch the automaker’s iconic station wagons. "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," Doug Speck, CEO of Volvo Cars of North America told media at the 2011 S60’s recent launch event (seen above) I attended in Portland, Oregon. As we already know, the just released S60-based sport wagon (the V60) won’t come to North America. And the V70 wagon won't be sold after the 2011 model year either. After that, the compact V50 wagon goes away in 2013, when Volvo also drops the S40 sedan. In their places, a new, even smaller sedan and compact crossover arrive to take on the BMW 1 Series and X1 crossover. With a nod to China’s hunger for large, Western-branded luxury cars, Volvo will also create new platforms within the next two years for the geriatric XC90 crossover and slightly fresher S80 sedan. Zhejiang aims to double Volvo's 2008 sales of just over 450,000 worldwide by 2013. To help, a new Volvo factory in China will churn out about 300,000 cars per year for the Chinese market. But that doesn’t mean the automaker is abandoning Western markets. Speck said that the new S60’s sales will be evenly divided by three, between North America, Europe and Asia. And those extra Asian sales will apparently help fund all of the new products. “Look, [Zhejiang] didn’t buy is to fail,” said Speck. But will this strategy work? By chasing the likes of BMW, while at the same time giving up its traditionally staid, soccer mom, safety-freak customers, do you think Volvo can fly with the big boys—and ultimately—survive? Or is separating itself from its mid-luxury rivals just the cure for the longstanding Swedish marque?

Comments