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Volvo Readies New Architecture; Prepares for Growth

Volvo Readies New Architecture; Prepares for Growth

The auto maker plans to increase global capacity 15% by producing the S60 in Belgium and Sweden, freeing up room for the XC60.

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Greater L.A. Auto Show

LOS ANGELES – Volvo plans to launch its new scalable global architecture with the next-generation XC90 cross/utility vehicle in 2014, the auto maker’s top executive tells WardsAuto at the auto show here.

The architecture, which underpins Volvo’s Concept You fullsize sedan, eventually will shoulder nearly its entire global roster, CEO Stefan Jacoby says.

“The scalable architecture enables us to cover about 80% of our lineup,” he says. “And that’s a pretty good number for us.”

Before the next-generation debuts, a mild refresh of the XC90 is due next year, the executive adds.

Volvo is enjoying a banner year in the U.S., with sales up 26.5% to 57,054 units through October. Jacoby attributes most of the success to the new S60 sports sedan, which he calls a “perfect fit” for the market, and the XC60 CUV, sales of which are up 11% through October.

“We see there’s an ongoing strong demand in North America,” he adds. “November will be a strong month (and we) see a very strong rally in North America to year’s end.

“(We’re) happy we’re participating in it.”

Volvo’s order book is full through spring 2012 and the auto maker is struggling to meet demand. “We have to admit we can’t supply volume to demand,” Jacoby says.

Plans are to increase global capacity 15% by producing the S60 in Belgium and Sweden, freeing up room for the XC60 and providing a greater degree of flexibility.

Currently, Volvo can build about 450,000 vehicles annually. But another 100,000 units can be squeezed out with the addition of a third shift at its Gothenburg, Sweden, plant, the executive says.

While rushing to meet global demand, Volvo also is expanding its presence in China, home to owner Zhejiang Geely.

“We’re now in the construction (phase) of a plant in Chengdu,” Jacoby says. “That plant will produce cars in 2013, and we will have access to China for growth there.”

He declines to reveal what vehicles will be built at Chengdu, but says there likely will be long-wheelbase versions of some models to accommodate Chinese businessmen who are chauffeured.

Volvo is known as a premium brand in China competes against Audi and Mercedes there, Jacoby says. Its reputation for safety is well known, and that is becoming a key purchasing consideration for Chinese consumers.

The auto maker also is turning attention to other emerging markets, such as Russia and Brazil. India is not in Volvo’s plans, largely because it does not want to spread resources too thin.

“What we are doing in China is big burden financially for us,” Jacoby says. “So we have to stay focused and do it step by step. We put our priorities into China, and then other markets.”

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