Daily Management Review

In Its Latest Upmarket Shift Under Geely, Volvo Rolls Out Compact SUV


In Its Latest Upmarket Shift Under Geely, Volvo Rolls Out Compact SUV
In what is the latest model in a sweeping overhaul of the carmaker’s line-up under Chinese ownership, Volvo Cars showed off its first compact SUV with the launch of its new XC40 model.
Volvo has been put on course for a fourth straight year of record sales by the success of its XC90 and best-selling XC60 SUVs, and the company would seek to emulate that success. Volvo has taken on larger rivals such as BMW and Daimler’s Mercedes-Benz with new, more upmarket models ever since it was bought from Ford by Zhejiang Geely Holding Group in 2010.
Data from IHS Markit shows that compared with just 20 percent a decade earlier, SUVs are expected to make up almost half of all sales within the C-segment by 2020 and this car segment have been growing in popularity in recent years.
“The XC40 is our first entry in the small SUV segment, broadening the appeal of the Volvo brand and moving it in a new direction,” CEO Hakan Samuelsson said.
The Audi Q3, BMW X1, Mercedes GLA and the recently launched Jaguar E-PACE are the primary and direct competitors for the XC40 of the company which is produced at Volvo’s plant in Ghent, Belgium.
“The XC40 is entering a crowded segment, but it’s a segment that’s still growing,” Ian Fletcher, an automotive analyst at IHS Markit, said.
The target customers that Volvo would be trying to appeal to are those who are looking for an SUV with modest off-road capabilities and better efficiency apart from those looking for a high driving position, practicality and with muscular looks of an SUV.
“Volvo is ploughing its own furrow and is trying to offer an interesting alternative to the German carmakers,” Fletcher said.
“This will appeal to city dwellers, people looking for some aspects of an SUV but with the cool Volvo styling.”
Along with Europe, especially Volvo’s home market in Sweden, China is expected to be a significant market for the XC40.
Fletcher said that after a few years in the doldrums, Volvo has seen a resurgence in the United States and the company is also expecting to do well there.
Accounting for roughly about half the expected deliveries for the Audi Q3 and the BMW X1, but more than around 60,000 Jaguar E-PACE, the XC40 is expected to selling around 100,000 units next year according to Fletcher.
The XC40 is the first model to come off a new modular vehicle architecture (CMA), which was developed with Geely in a bid to keep down costs and boost flexibility and will edge Volvo closer to its medium-term sales target of 800,000 cars, up from 534,332 last year.
Including the fully electrified vehicles, the CMA platform will underpin all other upcoming models in the 40 series.
All of its models launched after 2019 would be electric or hybrids, the Gothenburg-based company said in July.