VOLVO HITS GENERATION X HANGOUTS TO HYPE 2 NEW CARS

With two new small cars coming out, Volvo Cars of North American Inc. (VCNA) is targeting 200,000 sales in North America by 2004, VCNA President Hans-Olov Olsson tells Ward's Dealer Business.

That compares with 118,000 sales in Canada and the United States in 1998 and a projected 137,000 in 1999. These figures include 8,000 deliveries in Canada last year and 9,000 forecast for this year.

Despite this rising volume, Mr. Olsson says VCNA's dealership network won't increase. "We have a market transformation program underway, which basically will expand the territories of existing dealers," he says. "We have 335 dealers in the U.S. and 45 in Canada, and that's approximately where we'll be in 2004."

VCNA experimented with "Volvonet" plan to sell cars over the Internet earlier this year in the U.S. northwest and will "restart the program this autumn," says Mr. Olsson.

"Volvonet takes you through the entire buying experience. We're doing this program with our dealers. We're collecting information and working on automation, but right now (the system) is just tracking inventory."

VCNA is going after Generation Xers with its new small-car duo, the S40 sedan and V40 station wagon. Although both carry base prices in the low $20,000s, VCNA officials expect the average selling price to come in around $27,000 for the sedan and $28,000 for the wagon.

To kick off the new cars - the first smaller, lower-priced models Volvo has marketed in North America - VCNA is conducting a road show at Generation X hangouts in 34 cities including beaches, health clubs, bars and restaurants.

VCNA shipped one car to each dealer as part of the build-up hype for the July introduction.

VCNA forecasts 12,000 S/V40 sales during calendar year 1999 and 30,000 during the first full year on the market. The split at the outset is tipped 70%/30% sedan to wagon, says Mr. Olsson.

Volvo expects the average age of S/V40 buyers to be about 30, about 15 years younger than a typical Volvo buyer. Other demographics: 85% college graduates, 50/50 male and female, and an average household income of $75,000.