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Volvo to increase production of SUV model

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#1 ·
December 19, 2002
By TOMMY GRANDELL
ASSOCIATED PRESS

STOCKHOLM, Sweden -- Volvo may speed up production of its new sport utility vehicle, the XC90, after hundreds were lost in a shipping accident, the company said Wednesday.

Volvo said the number of buyers interested in the vehicle, combined with the loss of 350 in the sinking of a Norwegian cargo ship last week in the English Channel, has caused concern that demand may outstrip supply.

There were 2,900 cars, including Volvos, Saabs and BMWs, that went down with the ship. Most of the XC90s were headed for the United States.

Delivery times for the XC90 are already long. Buyers in Sweden have to wait as long as a year to acquire the four-wheel drive SUV. After the accident, there were fears the wait times could be longer.

"We have a general increase in orders for the XC90 model which means that we are now looking at the possibility to increase production," Volvo spokesman Christer Gustafsson said.

"Initially we aimed at 50,000 cars of the type per year and are now aiming for between 55,000 and 60,000," he said.

Since its introduction this year, Volvo has sold about 9,000 XC90s, more than half of them in the United States. The cars retail for around $37,000.

Also Wednesday, the company's powertrain unit said it will invest 375 million kronor ($42.2 million) in its plants in Skoevde, southern Sweden.

Volvo Powertrain, which makes engines, gearboxes, axles and other components for heavy commercial vehicles, said the investments will cover a new line for casting and modifications of the machining systems for its next-generation heavy diesel engine.

Volvo Powertrain develops and manufactures its products for vehicles bearing the Volvo, Renault and Mack brands. The unit employs nearly 8,000 workers in Sweden, France, the United States and
 

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#2 ·
Norwegian Ship Sinks Taking 3000 Luxury Cars With It
December 17, 2002
Motor Trend

A Norwegian cargo ship carrying almost 3,000 luxury cars worth 25-31 mln euros sank in shallow waters in the English Channel on Saturday after a collision in thick fog with a Bahamas-registered container vessel. There were no casualties, with the Norwegian master, a Swede and 22 Filipinos all safe, officials said.

A London spokesman for Wilhelmsen Lines said the Tricolor had been bound for the English port of Southampton with a cargo of 2,862 new BMW, Volvo and Saab cars worth an estimated total of between 25 mln and 31 mln euros, and 77 containers, which had been loaded at the Belgian port of Zeebrugge. The ship itself was valued at 25.1 mln euros, the spokesman said.

The cargo vessel Tricolor keeled over in the early hours after the incident withthe container ship Kariba 35 km north of the French Channel port of Dunkirk in one of the world's busiest sea lanes. The Tricolor was resting on its port side in 30m of water, brushing the surface.

The ship's Norwegian owner, Wilhelmsen Lines, said it would pump out the estimated 2,000 tonnes of fuel on board the ship, adding there were no immediate indication of leaks. The French Maritime Authority has ordered the company to pump out the fuel and have the vessel refloated.

"There was clearly a radar defect aboard at least one of the ships," said Captain Antoine Goulley, spokesman for France's Channel and North Sea Maritime Authority.

Copyright 2002 AFX News Limited.
 
#3 ·
Sinking sends car dealers scurrying

Retailers try to keep buyers whose vehicles were lost at sea

By Jim Henry
Automotive News / December 23, 2002

Salt damage
U.S.-bound cars lost on the Tricolor

BMW: 335* 3-, 5- and 7-series
Saab: 500* - 480 9-3s, 20 9-5s
Volvo: 2,020 - 637 S60s, 358 XC90s, 314 V70 wagons
* Approximate
Source: Automakers

Add shipwrecks to the list of things that can go wrong with launching a car.

The Dec. 14 sinking of the ship Tricolor -- in a thick, English Channel fog -- hit Volvo Cars of North America just as it began sales of its first sport-utility, the XC90.

The ship was carrying nearly 3,000 U.S-bound Saabs, BMWs and Volvos - including 358 XC90s. U.S. dealers have accepted deposits for about 9,000 XC90s but so far have delivered only 290 in October and 881 in November.

"This will add to the waiting list," said Michael Lazarus, executive vice president of group operations for Long Island Automotive Group, which includes BMW and Volvo stores in Massapequa, N.Y. At the current rate, 358 vehicles represents about two weeks worth of sales, when the waiting list is already months long.

"There was a loss of about 360 cars among about 360 dealers," Lazarus said. "I'm sure some guys will scream about the loss of one car, but we will share the pain; the factory will reallocate some cars."

At full production, the company expects U.S. sales of about 3,000 XC90s a month. That would make the XC90 Volvo's biggest seller in the United States.

Volvo lost 2,020 U.S.-bound vehicles - about 70 percent of the ship's cargo - including 637 S60 sedans. As of Dec. 1, Volvo reported a 56-day supply of cars in the United States, down from 95 a month earlier.

Dealers are scrambling

The automakers said they are insured against the financial loss. But U.S. dealers are scrambling to find dealer trades to satisfy customers who already may have been waiting weeks for their cars.

If those customers are willing to wait, all three factories say they will put the customers at the head of the line for new deliveries, which typically take about 45 days. If the customers won't wait, the dealer has to put them in a different vehicle - or unhappily refund the deposit.

Tim Smith, general manager of Bob Smith BMW in Canoga Park, Calif., said dealer trades and reshuffling allocations by the U.S. subsidiary should satisfy most customers. But some customers insist on an unusual combination of colors, options and equipment, he said.

There was also a handful of "European delivery" cars on the Tricolor - for instance, a half-dozen Volvos. Those are a special case because each customer paid for the car, put some miles on it in Europe and shipped it home as a used car to save customs duties. Dealers and factory spokesmen last week were unsure how those were insured or what will be done for those customers.

Down with the ship

Besides the lost Volvos, about 500 Saabs also sank. Saab Cars USA Inc. said 480 of them were 9-3s and the rest 9-5s. The company sold 1,536

9-3s in the United States last month. Low inventory should not be a problem; the company had a fat 155-day supply on Dec. 1.

BMW said it lost about 335 cars - a mix of 3-, 5- and 7-series models. There were no X5 sport wagons or Z4 sports cars aboard because they are built in South Carolina. Minis, built in Great Britain, were not on the ship.

The BMW brand sold 20,873 cars and light trucks in the United States in November. The company had only a 24-day supply of BMWs, not including Minis, on Dec. 1.

Smith was philosophical about the sinking. "In this business, we're used to things happening - a car falling off a truck or whatever," he said. "One good thing about a ship sinking: It's not something people will blame on the dealer."
 
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