Volvo Introduces Safer SUV as Debut Model Under New China Owner

By Elisabeth Behrmann and Niklas Magnusson | August 18, 2014

Volvo Car Group is designing its next sport-utility vehicle to prevent drivers from pulling out too early into traffic and to double engine power with an electric booster motor.

Crash-avoidance technology and accessories such as a crystal gear-shift lever by glassmaker Orrefors and an Apple Inc. touch-screen display will mark the Swedish carmaker’s first model developed under the stewardship of Chinese owner Zhejiang Geely Holding Group Co. when the SUV, scheduled for its first public presentation on Aug. 26, enters showrooms next year.

The XC90, replacing a version built since 2002, also represents the winding down of ties with previous owner Ford Motor Co. Gothenburg-based Volvo Cars is emphasizing its reputation for automotive safety with the XC90 while using options and styling to woo wealthier customers from SUVs such as the Bayerische Motoren Werke AG X5, Audi AG’s sporty Q7 or Mercedes-Benz M-Class line.

“Volvo is trying to leverage the whole image surrounding Scandinavian architecture and interior design with this vehicle,” Ian Fletcher, a London-based analyst at research company IHS Automotive, said by phone. “This car will show the world what Volvo can do as an independent business.”

Ford bought the company for $6.45 billion in 1999 from Gothenburg-based Volvo AB, which had decided to focus on manufacturing trucks and construction equipment, and the two

Swedish vehicle producers no longer have equity ties. Ford sold Volvo Cars to Geely for $1.8 billion in 2010 as the Dearborn, Michigan-based company got rid of premium brands amid a streamlining project after the global recession.

Market Share

Volvo Cars’ worldwide sales peaked at 458,000 autos in 2007. Its biggest slice of the U.S., now the world’s second- largest auto market, was 0.8 percent in 2004, versus 0.3 percent now, according to David Ibison, a spokesman. The brand has accounted for a little less than 2 percent of Europe’s auto market for the past three years.

The XC90 is the initial vehicle in Volvo’s four-year, $11 billion project to build a broad range of models on a single manufacturing line offering a selection of electric-power variants and safety components. Volvo is working on a separate setup with Hangzhou-based Geely for a small-car range that will use some elements of the production technology.

The SUV is “important because it’s the first car on this new platform: really stand-alone, 100 percent Volvo,” with no Ford components, Chief Executive Officer Hakan Samuelsson said in an Aug. 15 interview at headquarters in Gothenburg’s Torslanda district. “There is no second chance, of course. This has to work. We’re confident it will.”

Classic Version

Production of the current SUV at the Torslanda plant ended in July. The model is still being built in Daqing, China, exclusively for sale in that country as the XC90 Classic.

The new XC90 is part of Volvo’s drive for “more attractive cars” to close the sales gap with BMW, Volkswagen AG’s Audi division and Daimler AG’s Mercedes, the three biggest premium- auto makers, Samuelsson said.

“We completely endorse Volvo’s pursuit of its values,” Li Shufu, chairman of both the Swedish carmaker and Geely, said in an interview last month in Hangzhou. “We also support Volvo’s continued insistence on its safe, low-key and elegant brand positioning.”

Sensing Traffic

The XC90 will be equipped with a more vertical grille than its predecessor, as well as headlamps and indicator lights embedded in hammer-shaped fixtures. It will come with as much as 400 horsepower with an optional electric motor add-on. Safety features include systems to sense other cars’ distance and speed at an intersection, prevent the SUV from straying from its lane and tighten seat belts in the event it leaves the road.

Even with the brand’s focus on safety, which includes a program to eliminate car-crash fatalities by 2020, drivers look at all aspects of a vehicle when buying a Volvo, said Andreas Bauer, a co-manager of the Autohaus am Goetheplatz dealership in Munich that handles the marque.

“The most important thing is that the design of the car appeal to the customers,” Bauer said by phone. “People won’t buy the car for its safety features if they don’t like it aesthetically.”

(With assistance from Alexandra Ho in Shanghai and Dorothee Tschampa in Frankfurt.)

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