Volvo Not Quitting U.S., North American Chief Says

NEW YORK – John Maloney, president and CEO of Volvo Cars of North America, reassures dealers that the Swedish importer is staying put in the U.S.

Concerns about the Chinese-owned auto maker’s future here arose following The Wall Street Journal’s republication of a blog contending Volvo has insufficient resources to be a viable player in the low-end luxury segment, and should follow Suzuki’s lead in quitting the U.S. market.

Maloney tells WardsAuto in a telephone interview that Volvo is introducing four facelifted vehicles and a new generation of four 4-cyl. engines. The auto maker also has committed to a 25% increase in its marketing budget and a 20% “competitive” increase in incentives.

Many of Volvo’s 312 U.S. dealers have invested in expensive facilities upgrades ranging from complete ground-up replacements to renovations of existing stores. “They were glad to hear” the auto maker remains committed to this market, Maloney says.

The executive is encouraged by sales of the S60 and XC60 last month, which he called the two models’ best May in their history.

Revamped S60, XC60, S80 and XC70 models, which represent 83% of Volvo’s U.S. sales, will be introduced later this year as ’14 models. “There’s no signal that we’re lessening our pace here,” Maloney says.

The auto maker plans to replace its flagship XC90 cross/utility vehicle in 2015, making its debut as a ’16 model.

The new generation of 4-cyl. engines also will debut later this year. The turbocharged powerplants will deliver 15% more fuel economy than the models they replace. Maloney promises consumers will not be able to tell the difference between the new 4-cyl. mills and V-6s, but he declines to reveal horsepower or other specifications of the new engines.

Volvo will sell only gasoline-fueled vehicles here, while offering diesel versions in Europe.

The auto maker has suffered from a number of changes in its executive ranks over the past year, including the replacement of its chairman in Sweden and the recent departure of global marketing chief Doug Speck.

It hasn’t helped that Li Shu Fu, owner of parent company Zhejiang Geely, has criticized the design of Volvo’s vehicles, particularly the interiors.

“It feels too Scandinavian,” he said during a March interview on Swedish television network SVT Rapport, raising a chorus of denials from Volvo management that any differences exist between the Chinese parent and the brand’s Swedish designers.

Maloney declines to get involved in this issue, because he only has responsibility for the U.S. But, he notes, “Design is not a barrier in the U.S. for us.”

Volvo’s challenge is to get on more shopping lists. The most cross-shopped brand against Volvo in the U.S. is Audi, followed by BMW. Few Volvo buyers consider Mercedes, Maloney says.

“We’re on the right shopping list, but we need to get on more shopping lists.”