Volvo joins sport utility derby this fall
By Brian Lysaght
Bloomberg News Service
GENEVA — Ford Motor Co.'s Volvo Cars unit is counting on its first SUV, a $40,000 model called the XC90, to halt the Sweden-based luxury brand's declining U.S. sales.
Bloomberg News Service
"In the U.S., customers have been leaving us because we don't have a sport utility, and some people don't come into our showrooms because we don't have one," said Hans Wikman, director of XC90 development in a phone interview.
The XC90, the first sport utility vehicle produced by Ford Motor Co.'s Volvo Cars unit, will sell for about $40,000. Ford hopes it will halt Volvo's slide in the U.S. market.
Volvo's sales fell 17 percent this year through July in the United States, its biggest market. When the XC90 sport utility vehicle goes on sale in October, the goal is to sell 50,000 models annually, including 35,000 in North America.
Ford, the world's second-largest automaker, had a loss of $5.45 billion in 2001. Volvo, one of Ford's luxury brands, posted a record profit.
The XC90 is central to Volvo's plan to expand profitability and increase annual sales by 40 percent — to 600,000 vehicles by 2007, executives said.
Volvo's push comes as demand for SUVs in the United States and Europe rises.
Toyota Motor Corp.'s Lexus RX300 is the best-selling U.S. luxury sport utility, with sales of 42,598 vehicles through July, down 2.3 percent from a year earlier. BMW AG's X5 sales rose 14 percent to 25,008 trucks.
Carving a unique niche won't be easy, some analysts said.
"BMW is getting it right in terms of product and appeal and it's going to be tough for someone like Volvo to get in on that," said Mark Fulthorpe, an industry consultant with CSM Worldwide in Byfleet, England.
The seven-seat Volvo sport utility, developed at a cost of $500 million, has an all-wheel drive system and is designed for road use rather than trail driving.
The XC90 is powered by turbocharged six-cylinder 2.9-liter and five-cylinder 2.5-liter gasoline engines. In Europe, it's available also with a 2.4-liter five-cylinder diesel engine.
