Volvo to Launch Plug-In Diesel Hybrid in U.S.

DEARBORN, MI – Volvo Cars of North America Inc. will offer a U.S.-market version of its plug-in diesel hybrid planned for Europe in 2012.

Doug Speck, VCNA president and CEO, confirms the rollout in an interview with Ward’s. But he declines to reveal when the PHEV, based on the Volvo V70 wagon, will hit U.S. shores.

Volvo says the PHEV will be able to run up to 31 miles (50 km) on electric power before its diesel engine kicks in. The car’s lithium-ion battery will take about five hours to recharge from a household wall socket. A battery supplier for the vehicle has yet to be announced.

Volvo expects costly batteries will push the price tag on its PHEV “considerably higher” than a conventional diesel-powered car.

Speck says the PHEV is a “Volvo-specific initiative,” and plans for its rollout won’t be affected by the pending sale of the Swedish auto maker by parent Ford Motor Co. A test fleet was built in conjunction with Swedish utility Vattenfall AB.

Although the sale won’t scuttle the PHEV project, Speck admits once Volvo and Ford part ways, technology partnerships likely will be sought because they afford “the efficiencies you need to compete and to continue to push the edge of the envelope.”

Speck also says he has no knowledge of who leads the bidding for Volvo. Chinese auto makers Geely Automobile Holdings Ltd. and Chongqing Changan Automobile Co. repeatedly have been mentioned as potential suitors, and recent reports suggest a U.S. bidder called the Crown Group has entered the fray.

The Crown group is led by Michael Dingman, a former Ford executive, his son James Dingman and Shamel Rushwin, also a former Blue Oval executive.

Volvo plug-in diesel hybrid to run up to 31 miles on electric power.

“I really don’t know anything about these guys,” Speck says. “People ask me about Michael Dingman. I’ve never met him.”

He says there is no timetable for the sale of Volvo and admits there’s a possibility the auto maker will not be sold, should Ford be unable to find a suitable buyer.

“Ford has stated (Volvo’s) an asset that has value, so they’re not going to just give it away,” Speck says. “It has to be a party that values it enough. But the most likely situation is they’ll find an interested party and they’ll sell it.”

The sale of Volvo likely will benefit both companies, he adds, noting today’s competitive automotive market requires a laser-like focus and attempting to manage too many marques can sap valuable resources and divert attention from the core brand.

Shortly after arriving at Ford, CEO Alan Mulally expressed a desire to move Volvo more upscale to better compete with German luxury brands such as BMW and Mercedes-Benz. Speck says Volvo will adhere to the course outlined by Mulally, although it’s important not to try and emulate the Germans.

“We’re a European luxury brand, and that means we have to be able to present a product to the market place that customers are willing to pay a premium for,” he says. “Otherwise, the model that we have doesn’t work.”

“We’re not trying to be BMW or Mercedes. They’re great businesses, but Volvo can’t go chase them,” Speck adds. “We have to be a luxury brand done in our own Swedish way. We think we can do that and say to the customer, ‘Pay us a premium,’ and they’ll agree with us.”

Speck points to the XC60 cross/utility vehicle as an example of Volvo’s current direction. The CUV, launched in February, has received critical acclaim that has helped drive Volvo’s U.S. sales.

“If you look at the other cars in the segment – the Audi Q5 and Mercedes-Benz GLK – you can put the XC60 in that mix and not apologize,” he says. “It’s a heck of a car and customers recognize that.”

Through September, Volvo delivered 5,884 XC60s in the U.S., according to Ward’s data.

On the horizon is the redesigned Volvo S60 sedan, set to bow in third-quarter 2010. Speck promises it will be “a sporty volume player.”

Meanwhile, he expects Volvo to sell between 340,000-350,000 units this year, adding changes in the auto maker’s cost structure have lowered its break-even point.

With “any kind of uptick, globally” Volvo will achieve profitability, Speck says. “We have to grow, but we don’t have to grow a lot to make money.”

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