Volvo NA Chief Sees Turnaround in 2010

NEW YORK – Volvo Cars of North America Inc.’s sales will continue to slide through the remainder of the year but should pick up again in 2010, President Doug Speck tells the International Auto Press Association here.

Speck, a 25-year industry veteran, took the helm at VCNA last March after Swedish parent Volvo Car Corp. decided to cut unprofitable volume about 15%.

Through September, Volvo’s U.S. sales plummeted 26.6% to 73,000 units from nearly 81,000 year-ago. Much of the decline was due to a decision to no longer offer leasing on the C30, S40 and V50 entry-level vehicles and instead focus on higher-margin models.

Volvo has notified its dealers that it once again will offer leasing programs on the S40 and V50 models, effective Nov.1, because the dollar has strengthened significantly in recent months compared with the Swedish krona and euro.

“It was hard to make a margin on the small cars in our portfolio,” Speck says. “The good news is that we can now make money on our small cars.”

Despite continuing press reports that Ford Motor Co. will spin off the Volvo brand, Speck says he doesn’t think that will happen. He also is confident Ford will not sell its remaining one-third interest in Mazda Motor Corp.

XC60 could become Volvo’s second-highest volume model, executive says.

VCNA’s relocation back to the East Coast in Rockleigh, NJ, makes it easier for Speck and his staff to deal with Volvo headquarters in Gothenburg, Sweden.

However, when the move is completed next February, VCNA will have 20% fewer employees than when it was located in Irvine, CA.

“I’m concerned because we lost a lot of persons who made Volvo successful (in the past),” Speck says. “They invested a lot of time, energy and passion in the brand.”

Speck plans to align the auto maker’s resources around the consumer and focus on Volvo’s core qualities.

“Safety is still our mantra,” he says, noting the auto maker has set a goal of having no motorist die in a Volvo crash after 2020.

Volvo will debut early next year the XC60 cross/utility vehicle that will come standard with a low-speed braking system dubbed City Safety.

“That system will address 75% of the accidents that take place today,” Speck says.

The system is designed to reduce collisions that occur at speeds less than 18 mph (29 km/h) by automatically applying the brakes should the driver fail to react.

“It will be easy for dealers to demonstrate this system on their lots,” Speck says, adding the XC60 could well become the second-highest volume model in Volvo’s portfolio, after the XC90.

Speck says Volvo has made good progress in simplifying its incentive programs for dealers. “The best brands have consistent marketing (programs),” he notes. “Our dealer incentives are now easier to understand, and the discounts are more consistent.”

Volvo has successfully reduced fleet sales to less than 13% of its total volume, Speck says. The auto maker intends to keep profitable commercial-fleet sales but is intent on getting out of the unprofitable rental-car business.