If you are like your neighbour and your neighbour’s neighbour across Canada, you scratched Volvo off your shopping list in the middle of the last decade. That was when Volvo’s then-owner, Ford Motor Co., put a halt to major Volvo investments while One Ford struggled to get its own house in order to avoid bankruptcy.
In 2006, Canadians bought nearly 10,000 Volvos. By 2010, the year China’s Geely paid Ford about $1.5-billion (U.S.) for Volvo, Canadian sales had slid to less than 6,000. This year, Volvo will sell no more than an estimated 5,000 cars to Canadians. It’s been a long, long slide.
The good news, if you have a soft spot for this Swedish car brand and fondly recall the soothing tones of Donald Sutherland flogging the brand on TV, is this: Geely bought Volvo at a fire-sale price. Ford had purchased Volvo in 1999 for $6.45-billion, which means the big Chinese conglomerate can afford to plow $11-billion (U.S.) over four years into a total remake of every model in Volvo’s lineup. New Volvo! Hurrah.
Volvo obviously plans to challenge the dominant German premium brands – BMW, Audi and Mercedes-Benz. Volvo Canada president and CEO Marc Engelen says there might be an opportunity there, too. More than a few premium buyers find themselves a little dismayed by the German drive down-market with vehicles such as the Mercedes B-Class wagon and the upcoming front-drive BMW line. They might be willing to give a look-see to new Volvos such as the electrified XC90 SUV.
The reinvented XC90 arriving next April is just one of three new Volvos headed to dealers next year. They come on the heels of the new 2015 Volvo V60 Sportswagon launched this year at a starting price of $39,800. Within three years, adds Engelen, Volvo Canada will offer 11 models, up from the current six.
In a nutshell, Volvo Canada plans to offer three to four variants of its core large, medium and smaller models – the 90-, 60- and 40-series. After the XC90 SUV, look for sedan and station wagon versions with the S90 sedan likely first. And so on and so on, all built on Volvo platforms and powered by Volvo engines designed and developed back at headquarters in Gothenburg, Sweden.
So where do the Chinese owners fit into this picture? Good question. If they are as meddlesome and hard-headed as Ford was reported to have been, Volvo really has no hope. Ford, as Volvo insiders will say, tried to imprint Ford’s own working principles and practices on Volvo – to transplant Dearborn, Mich. to the coast of Sweden. The clash of American and Swedish cultures just didn’t work. Don’t believe me; believe the disastrous sales numbers.
Engelen and others at Volvo now insist that the Geely owners have taken an entirely different approach. Geely leadership told Volvo management to take a big pile of money and reinvent Volvo. If Volvo hits its numbers, all will be good.
“I want to tell you, we have our own fate in our own hands. Volvo is Swedish. The owners are Chinese, but Volvo is a Swedish company,” insists Engelen. “The products which are coming out, the culture of the company, all these are Swedish. You cannot say we are a foreign company. Under Ford we had to take Ford’s principles. Under Geely, the products will be Swedish and the designs will be Swedish.”
The plan just might work, too. For inspiration, Volvo’s bosses need look no further than Jaguar Land Rover. As with Volvo, Ford sold JLR in 2008 to India’s Tata, also at a liquidation price. Tata immediately pumped up JLR with funds to rebuild the products. Today, JLR sales are surging and earning Tata billions in profits.
“We are in a similar situation to Jaguar Land Rover, but they were sold two years before we were. You should not forget that. So those two years of increases they have had, we will probably get next year and the year after. Why? Because we have new products,” says Engelen.
Volvo has long run with the slogan, “Volvo for life.” As it turns out, Volvo itself has life after nearly a decade on life support.
The writer was a guest of the auto maker.
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