North America a Black Spot for Volvo

Volvo Car Corp. is coming off a record year in 2007 that saw global sales hit 458,000 units.

The one black spot was North America, where the auto maker's sales declined for the third straight year. Volvo sold about 106,000 units in the U.S. in 2007, and sales this year appear destined to dip below 100,000 units.

Volvo is looking to the XC60 cross/utility vehicle, displayed at the auto show here, to help prop-up North American sales, CEO Frederik Arp says.

Early last year, Volvo changed its strategy for the market.

“We went for a more high-end mix with more content in cars,” Arp says. Volvo also reduced its support for the entry-level C30 here due to the dollar's weakness.

That's in sharp contrast to Europe, where the C30 — especially the diesel version — is a strong and profitable model.

“In North America, our focus is on larger cars,” says Gerry Keaney, senior vice president-of marketing, sales and service, adding that is the reason the C30 isn't strongly marketed here.

But he says U.S. dealers wanted the small model because it extends Volvo's brand reach and generates additional showroom traffic.

Arp forecasts North American volume will further decline up to 12% this year.

Volvo, which has not been profitable in North America in recent years, will begin reporting its quarterly financial results at the end of April, opening up its balance sheet to closer scrutiny.

Additionally, Volvo must present parent Ford Motor Co. with a complete plan for improving operations and profitability in the year's second quarter, Arp says.