New CUVs Bolster Lineup for Already Surging Volvo

NEW YORK – With the XC60 CUV set to hit U.S. showrooms later this year and the smaller XC40 to come, the picture is getting even better for an already thriving Volvo.

Making its North America debut at the New York International Auto Show here, the XC60 is based on Volvo’s ubiquitous SVA (Scalable Vehicle Architecture) platform and nestles into the lineup just below the XC90.

It will be offered with three powertrain choices: the 250-hp T5 turbo gasoline 4-cyl., 316-hp T6 turbocharged/supercharged 4-cyl. and T8 plug-in hybrid rated at 400 hp.

The new ’18 model, expected to arrive in the U.S. by the fourth quarter, has a tough act to follow. Global sales have been on the rise for the current XC60, despite its length on the market, and more than 1 million of the CUVs have been delivered worldwide over its 9-year lifespan.

In the U.S. XC60 sales inched up 2.5% in the first quarter to 3,736 units, and last year the automaker sold more than 20,000 of the CUVs here.

“Dealers are really hot for those cars,” Lex Kerssemakers, CEO of Volvo Cars North America, says of the brand’s revamped lineup of CUVs.

Kerssemakers declines to forecast volume for the new XC60, but he does say he expects sales to outpace that of the bigger, more expensive XC90.

“I’m not going to release numbers yet,” Kerssemakers says. “But I expect the car to sell more than the XC90 does, because the segment is bigger. We sold about 33,000 XC90s (last year in the U.S.), so it should be above that.”

The XC40 will be launched at the end of the year and reach U.S. dealers in February, further strengthening Volvo’s CUV bench. Last year, CUVs accounted for two-thirds of the brand’s U.S. sales, and volume likely will skew even further toward light trucks as the new XC60 and XC40 join the lineup.

“We see a lot of trends toward (CUVs),” Kerssemakers says. “That’s why I feel so comfortable. You need sedans, you need wagons; with the cars that we have we cover 90% of the market.

“And they’re all new cars,” he adds, pointing to plans to complete a total refresh of the Volvo portfolio by 2019. “So I feel pretty comfortable that we’ll be good.”

Volvo sold a record 534,332 vehicles worldwide last year, and deliveries rose 18.1% to 82,724 units in the U.S., not bad for a brand on the endangered list prior to its acquisition by China’s Zhejiang Geely Holding Group in 2010.

One concern for Volvo is the proposed border-adjustment tax, which would levy a 20% tariff on all goods imported into the U.S. The measure is said to be losing steam in Washington, but for now it still worries automakers.

“It would make our life very difficult, but not only our life, also the consumer’s life,” Kerssemakers tells WardsAuto. “There will be a price penalty, and it has to go somewhere. So, yes, I’m worried about it, but in the end I’m hoping for a lot of common sense and entrepreneurship. This is not the right way to go.”

Volvo does have a plant under construction in South Carolina and slated to begin producing cars in third-quarter 2018. That will lessen the automaker’s reliance on imports somewhat, but the plant is designated as the sole source of S60 sedan production for the world, leaving Volvo without local production of more-in-demand CUVs.

Kerssemakers says Volvo is “absolutely” considering adding CUVs into the mix in South Carolina, “but in all fairness it comes and goes. What we see is (CUVs) are important, sedans are important. That’s the core of the business. There will be a time when sedans go up again. It’s always a mix and a timeframe.

“Of course I’m looking at it,” he says. “If I have a (CUV in production there), I’ve covered the two most important market segments in the United States. But that’s far away; the total focus is now on the S60. That’s difficult enough.”

[email protected] @DavidZoia