Volvo Sets Realistic Sales Goal for North America, Top U.S. Exec Says

NEW YORK – Volvo Car’s U.S. sales are rebounding this year, climbing 11% in the first quarter, and “April also looks pretty darn good,” says Doug Speck, president of Volvo Cars of North America.

“We'll be up by more than 11% this month,” he tells Ward’s in an interview.

But unlike his recent predecessors, Speck isn't promoting a sales target anywhere near 200,000 vehicles annually.

That's the goal Volvo adopted for the U.S. when Wolfgang Reitzle, then chief of Ford’s Premium Auto Group, told the Swedish subsidiary to aim for a 600,000 worldwide deliveries units annually.

That would have required VCNA to account for one-third of the brand's global sales. Now Speck's boss Stefan Jacoby, president of Volvo Car in Sweden, has announced a global goal of 800,000 vehicles annually for the brand. But North America will account for far less than one-third of that target.

Much of Volvo's growth is destined to come from China, where parent Geely Holding Group is headquartered. Volvo is the largest takeover of a foreign brand by a Chinese auto maker to date, and Geely has given Jacoby the go ahead to build up to three new plants in China to produce cars for the domestic market.

Jacoby reportedly told reporters at the recent Shanghai auto show he wants to grow Volvo's sales in China to 200,000 units annually and intends to achieve this by offering unique products to Chinese buyers.

Further revealing Volvo’s increasing emphasis on the Chinese market is Jacoby's decision to travel to the Shanghai show that runs concurrently with the New York International Auto Show here.

Concept Universe sedan unveiled in Shanghai, where Volvo sees much of future growth.

Jacoby unveiled the Concept Universe prototype sedan in Shanghai, reportedly slated to replace the S80 as Volvo's flagship sedan. The new model is the first major product from the Volvo design studio in Gothenburg, Sweden, since Peter Horbury returned to head that unit, after a long stint at Ford’s design studio in Dearborn, MI.

A production version of the Concept Universe is slated to debut at the Frankfurt auto show this fall.

Speck says Volvo's real growth in the U.S. is tied to new models smaller in size than the S60 sedan and XC60 cross/utility vehicle. “We'll have to plan to play in that segment,” he says. Along with the midsize cars, the new small models will be “the foundation of our business in North America.”

Rather than shooting for higher volume, Speck is focusing on increasing VCNA's profits by boosting average transaction prices for its portfolio. “You need products that customers recognize and value like the XC60 and S60 to command higher prices,” Speck says.

Those models are fetching higher prices with almost no incentive support, he claims. “People will pay us for those vehicles.”

Speck admits the Volvo brand commands lower equivalent selling prices than Audi, which, in turn, trails its German competitors. However, “this business is a journey, not a short trip,” he says. Volvo will close the gap in selling prices as it brings out new model generations. “The XC60 and S60 are the best examples of that.”

Volvo has been insulated from supply disruptions caused by the Japanese earthquake and tsunami, Speck says. “We've secured production through model year '11, but we have some issues concerning '12,” and the auto maker is sorting through those problems.

Jacoby is quoted by the media in Shanghai as saying Volvo has not suffered any production losses or change to its model mix. “We have some specific components where we are relying on Japan, but we managed, together with suppliers from Japan, to find alternatives within Japan but also out of other countries and other production locations abroad."

Jacoby also predicts semiconductor shortages will emerge this summer, affecting Volvo's ability to produce gearbox control units and powertrains.

Volvo acquired much of Ford's technology before being acquired by Geely last year. However, one innovation it did not get is the Ford Sync system. Instead, Volvo is using its own Sensus entertainment and infotainment system.

The new interactive system is available only on ’11 and ’12 S60 and XC60 models. Sensus offers a 7-in. (18 cm) high-resolution color display for navigation and other functions. The technology allows car buyers to explore features of the two models and personalize them to their own needs.

Speck says Volvo intends to avoid driver distraction with Sensus, emphasizing the auto maker intends to remain a safety icon. “Safety comes up in every sale,” he reveals.