Volvo Looks to Revamp Its Brand, Starting With the XC90

[Volvo XC90 News]

The 7-seat sport-utility vehicle is a bit big for the narrow streets of Barcelona, requiring some careful finessing by the automotive journalists who have come to Spain for the first drive of the 2016 Volvo XC90.

The Swedish automaker itself has had to do a fair bit of maneuvering in recent years. Sold off by Ford Motor Co. in August 2010, Volvo's sales took a sharp dive that has stretched both the resources and patience of its new owner, Geely Automobiles. In a bid to take on luxury market leaders like Mercedes-Benz and BMW, the ambitious Chinese carmaker is investing $11 billion to completely replace Volvo's entire line-up, with seven new models set to roll out over the next four years - starting with the XC90.

"This car is everything we stand for," says Bodil Eriksson, the executive vice president of marketing for Volvo's U.S. subsidiary. "It captures everything we want to do."

What Volvo is hoping for is a repeat of the success it had when the original XC90 was launched in 2002, three years after the struggling car maker was purchased by Ford. It was the company's biggest success ever, leading the big SUV sales charts and generating 630,000 in sales. Forty percent of that volume was in the critical U.S. market.

Demand has slacked off in recent years for the XC90 - and for most of the rest of the Volvo line-up, so how customers react to the new model will be critical. But Volvo knows that in the crowded market it can't just offer a "me-too" SUV.

Sure, there are the expected features: plenty of cargo space, the higher "command seating" and all-wheel-drive. But while competitors put an emphasis on big V-6 and V-8 engine, Volvo is shifting its powertrain strategy to a cleaner and more fuel-efficient line-up. Going forward, the XC90 - and the rest of its models - will be powered by compact four-cylinder engines. The new ute, or utility vehicle, will mark the debut of Volvo's first gas-electric model for the U.S. market.

But the XC90 T8 package won't easily be confused with the likes of a Toyota Highlander Hybrid. True, the Volvo plug-in will offer a significant boost in mileage, with an EPA-rated 58 MPGe, as well as the ability to travel up to 25 miles per charge before the gas engine takes over. But the T8 will also be the highest-performance version of the XC90, capable of launching the 7-seater from 0 to 60 in just 5.8 seconds.

It's that mix of performance and environmentally friendly design - along with an extensive package of safety features - that Volvo hopes will help the new ute, and the six products to follow, stand out.

"This is the first visible result of the transformation of Volvo Cars since 2010 when it was sold by Ford" to China's Zhejiang Geely Holdings, said Hakan Samuelsson, the president and CEO of the Volvo Car Group.
New plants in China

Since the takeover, Geely has not only pumped cash into Volvo's product development effort but also added two new plants in China. That is already helping the Swedish brand gain traction in what is rapidly becoming the world's largest luxury car market.

"We are fully committed to the growth of our business in China, our second home market," said Samuelsson.

At the same time, Volvo is set to become the first automaker to begin marketing a Chinese-made vehicle in the U.S. for 2016, a stretched version of its S60 sedan that is only produced at a new plant in Chengdu, near Geely's headquarters.

Volvo officials insist there is no reason to worry that Volvo will somehow lose its traditional Swedish character. It's continuing to put an emphasis on safety, something that has long defined the brand. The maker has set a goal of having no passengers killed while riding in any Volvo vehicle produced after 2020.

And a recent study by the Insurance Institute for Highway Safety suggests the maker is moving in the right direction. The outgoing XC90 was one of just nine vehicles for which no deaths were recorded during a three-year period ending in 2012.

Earlier this week, Volvo announced another step towards that goal. It plans to begin a new pilot project, "Drive Me," that will soon see 100 fully autonomous vehicles driven by local citizens in its home town of Gothenberg. It hopes to have a production model ready early in the next decade and expects such technology could be one of the biggest breakthroughs since Volvo invented the three-point seatbelt in 1959.

That project, along with the XC90 and the rest of the planned line-up, couldn't come without the deep pockets of Geely, Volvo officials insist. But whether the costly effort will work is far from certain. The big test will came mid-year. That's when the new SUV begins reaching showrooms in the U.S., Europe, China and other parts of the world.