Volvo Growth Strategy – New Management, New Strategy, New Drive-E Powertrains, New Vehicles

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Volvo Growth Strategy: Tony Nicolosi, new President and CEO of Volvo Cars of North America says 90% of the senior management of VCNA is new since he took over in October 2013. Volvo’s marketing strategy is also going to change with the arrival in January of Bodil Eriksson as executive vice president of marketing and new advertising agency Grey London starting in March. Nicolosi says Volvo will return to its roots emphasizing safety, the environment and the family. The marketing budget for 2014 is bigger by about 50% but its emphasis will shift away from television to digital messaging.

Prior to becoming head of VCNA, Nicolosi was head of Volvo Finance in the USA, so he is very familiar with the leasing game. About 42% of Volvos are leased, well short of the leasing penetration of Audi, BMW or Mercedes. Going forward, Volvo’s lease penetration should increase with more concentration on more car for the payment and regular replacement. This will give Volvo dealers the first shot at putting off-lease customers into a new Volvo.


Volvo 60s Las Vegas

So, are big things expected on the sales front? Not so much, and here’s why.

Lineup Thin, Core Products Aging Volvo has dropped the S40 small sedan and V50 small wagon. The C30 2-door hatchback and retractable hardtop C70 ceased production in late 2013, but if you want one, there are still some on dealer lots. This leaves the brand with its core vehicles of S60, S80, XC60, XC70 and XC90. The XC90 crossover is ancient in today’s auto world having been launched for the 2002 model year. But remarkably, it is still pretty competitive. Volvo showed the Concept XC Coupe at the Detroit Auto Show that hints at design cues for the 2016 XC90 which will be launched in Spring, 2015.

Once upon a time, Volvo was known as the premier wagon purveyor in the USA. Its wagons could be seen lined up in front of elementary schools all over the country with soccer moms waiting for their little darlings. Volvo began dropping its wagons as it added crossover SUVs – XC60 and XC90 – as crossovers pushed wagons out of favor. This was the right decision overall, but somehow, Volvo just did not seem complete without a wagon in the lineup (closest thing is the XC70). For 2015, the V60 (wagon, estate) that has been on sale in Europe for a couple of years now has been added, but is expected to sell about 4,000 to 5,000 units and some of those will cannibalize from other vehicles in the Volvo lineup.

New Drive-E Powertrains to Replace Legacy Units To meet regulatory and competitive pressures, Volvo is replacing its legacy five-cylinder and 6-cylinder engines with a family of 2.0L 4-cylinders they call “Drive-E” mated to an 8-speed automatic transmission. This also is to give Volvo “technological independence” in the powertrain realm. There are diesel and gasoline variants of the Drive-E 2.0L, but the USA gets only the gasoline version. Understandable since diesels still have not caught on in the USA the way they have in Europe. While all Volvos eventually will get the Drive-E engines, the launch cars are the front-wheel-drive versions of the S60, V60, S80, XC60 and XC70.

All front wheel drive Volvos will have the 240HP T5 2.0L I4 Drive-E Turbo as standard equipment (XC90 is AWD Only). The front wheel drive S60 and XC60 are available in the T6 302HP version with a supercharger/turbocharger setup optional. All wheel drive Volvos use legacy engines for now – the T5 with 2.5L in-line 5-cylinder with 250HP (S60/V60) or the T6 with 302HP 3.0L in-line 6-cylinder (S60/V60/XC60/XC70/S80) or a 3.2L non-turbo in-line 6 putting out 240HP (XC60/XC70). Complicated? Yes.

The first Drive-E units are V60s on sale now. T5 Drive-E products will be in the showroom in February 2014 and T6 vehicles will arrive in June.

Driving the Drive-Es We drove the S60 sedan in T6 form with 302HP and the supercharged/turbocharged engine. Tractable, seamless, smooth. There was a slight shudder from the start/stop function on the engine when moving after a stop, but it was not objectionable. The supercharger/turbocharger combination quickly lets you forget this is a 4-cylinder engine. The V60 wagon with the T5 single turbo powertrain was the same. The fact that the T6 has 62 more horsepower was not really evident in the S60. Think of the T5 engine as the equivalent of BMWs excellent 328i 2.0L Turbo unit. Volvo has deliberately not changed the personality of the V60 to be a wagon. It rides and handles much like the S60 sedan, firmly planted and confident. Having the wagon cargo area is a definite benefit and those folks who like mid-sized European wagons will certainly like the V60.
Volvo V60 SV VehicleVoice
We have to mention Volvo packaging a bit. The mid-size Volvo entries – S60, V60, XC60 – are about a half-size too small. While they are easy to live with, ergonomically excellent, they are not spacious. Even the top-of-the-line sedan S80 is small for its position in the market. The original S80 was a generous sized car. In fact Ford’s large cars and SUVs are based on the original Volvo S80 and the Fords are generously sized. It’s tough thinking big with fuel economy and safety regulations looming over the industry, but if Volvo truly expects to break away from other premium European brands, it needs to think bigger.

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