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Ford’s Volvo, led by new S80, moving into higher gear

But image confused; Are Volvos exciting, or at one with nature?

By Neil Winton
The Detroit News

Photo's by Global Auto Index

BASTAD, Sweden - Volvo’s new S80 flagship sedan is a nice looking car, maybe uncannily like the old one; but well, nice.

I doubt if potential buyers will be getting too excited about the styling.

Volvo’s public relations machine is, though.

“The inspiration for the car very much comes from nature. It’s like how water has formed a coastline or how the flow of a stream cutting though the landscape feels very natural and comfortable,” says Volvo’s publicity material.

“The exterior has a similar shape as the grey cliffs by the ocean, gently rounded by the water but still holding on to their sharp distinctive features.”

This is, of course, a car which is big enough to seat 5 in comfort, boasts a 4.4 litre, 315 bhp V8 engine, four-wheel drive, and spews out a considerable amount of CO2.

The interior sparks off more potty hyperbole.

“Or look at the upper part of the instrument panel, resembling an untouched snow-covered meadow on a winter’s day,” says Volvo.

Volvo knows that it has to fend off leading luxury marques like BMW, Mercedes, Audi, and Lexus if its new car is to be successful, so we can forgive a bit of hype.

And Volvo, owned by Ford since 1999 and part of its Premier Automotive Group (PAG), is a company on the march.

Up 60 per cent

Production is set to grow by almost 60 per cent between 2005 and 2012, from just over 445,000 to 706,000, according to automotive consultancy CSM Worldwide.

Ford could do with a bit of help. It lost a net $1.19 billion in 2006’s first quarter compared with net income of $1.12 billion in the same period of 2005. North American auto operations lost $457 million before taxes compared with a pre-tax profit of $664 million a year earlier. Other bits of PAG, which includes Land Rover, Jaguar and Aston Martin, are struggling with profitability. Volvo seems to be doing well, although Ford doesn’t reveal the financial details of PAG companies.

PAG reported a pre-tax profit, excluding special items, of $163 million for the first quarter, compared with a pre-tax loss of $55 million for the same period in 2005. In all of 2005, PAG lost $100 million, with the biggest red numbers probably coming from Jaguar, and the most profits from Volvo.

Little C30, XC-50 will lead the charge

“Volvo will be the motor of growth in Europe (for Ford) in the next 6 years. It has the right products, the right brand image, and the right platform strategy including blue oval (Ford) products and the rest of the Premier Automotive Group to capitalise on the scale they already have going forward,” said Andrew Wright, CSM’s Senior Analyst, European Vehicle Forecasts.

Ford’s new platform strategy calls for the new Mondeo family saloon, to be unveiled later this year, to spawn a big range of products including the Ford Galaxy and Ford S-Max MPVs, and the Land Rover Freelander (to be called the LR2 in the U.S.), Jaguar X-type replacement, Volvo V-70 estate car, and the S80, according to Wright.

The trick is, Wright says, is to make sure that although many cars will be the same under the skin, some, like the Volvo S40, can sell for prices much higher than its sibling, the Ford Focus.

Volvo is also extending its range downwards later this year with the C30, a three-door hot hatchback. And experts expect a new XC-50 SUV, to fit in below the highly successful XC-90.

Philip Rosengarten, analyst with Global Insight in Frankfurt, Germany, and co-author of a new book “Premium Power”, believes the XC-50, likely to launched in late 2008, will be the key to faster growth for Volvo.

“The XC-50 small SUV has quite a growth potential for Volvo,” said Rosengarten.

Global Insight reckons Volvo production will reach 453,000 in 2006, up a bit from 2005’s 450,000, but will spurt ahead to 530,000 in 2007, and 580,000 in 2008.

600,000 by 2009

Volvo CEO Fredrik Arp has said sales will hit 600,000 by 2009.

“600,000 by 2009? That’s not unachievable, but a bit of a stretch. The XC-50 is the key,” said Rosengarten.

Rosengarten believes Ford’s management of Volvo has been impressive, as it has resisted the temptation to manage it like a volume brand. He believes that so-called premium brands like Volvo must be innovation-led and Volvo has done this with safety, and customer focus. The XC-90 SUV for instance, was the first 4x4 to boast a computerised device which intervened if it detected the vehicle was about to tip over.

Professor Peter Cooke of Nottingham Trent University’s Motor Industry Management School, in the English midlands, is not so sure of the strength of Volvo’s position.

“Volvo seems to be almost caught in a time warp. Is it a luxury car, or is everybody else catching up. And it used to have green credentials, but everybody else is doing that,” said Cooke.

Which way is it facing?

When Volvo unveiled the new S80 at the Geneva Car Show in March, the company seemed to be almost schizophrenic in its approach, caught between two stools. It felt the need to appeal to the tree huggers and sandal-wearers, hence it’s warm words about how close the design of the car was to nature, and snow covered fields in the morning, but it was also anxious to underline the fact that this car was also a bit of a whizz bang goer, with Volvo’s first V8 muscle motor in a sedan.

Because of its reputation, you would have expected Volvo to have been leading the way with new forms of environmentally friendly engines like hybrids, although the company does offer bio-fuel motors.

Cooke said Volvo is working on repositioning itself and reinventing its green credentials.

“Profits and volume aren’t what they used to be, so Volvo hasn’t been able to go into hybrids, it doesn’t have the cashflow to support it,” Cooke said.

“Volvo is trying to move upmarket again with the S80 and move back into the lower end of the luxury market, trying to move above the household market, and out of the mainstream where you are competing with the volume manufacturers.”

Reinvent environmental credentials

“Volvo needs to reinvent its environmental credentials and it’s looking to get back the unique brand image it used to have. And it makes sense, lots of people are still looking to traditional values of safety and comfort, lots of people are saying ‘I’ve got as far as I want in terms of cars’ and look to protect that. Volvo has lost loyalty and needs to get it back,” said Cooke.

John Wormald, analyst with automotive consultancy Autopolis, disagrees, and believes Ford has done a good job of stewardship, and reckons Volvo is heading in the right direction.

“Volvo has certainly improved their cars in terms of styling, interior finish and driveability. They’ve done a very good job with their long established style and personality of their own. They’ve got good market positions too with a balance between Europe and America, and the Far East,” said Wormald.

“Styling is continuous, it’s not a flashy brand, no Chris Bangle at work here,” he said.

Bangle is the controversial BMW designer who has transformed its cars from being relatively unobtrusive and conservative, to the more look-at-me edges of the BMW 5 and 3 series, and so-called “flame-surfaced” styling of the BMW Z4 roadster.

“Volvo buyers are still the ones with old money,” said Wormald.

So will the S80 do the business for Volvo, when it goes on sale in the U.S. late this year? Sales start in Europe this summer.

Volvo says it wants to sell 50,000 S80s a year, 20,000 in the U.S., and 20,000 in Europe, that compares with the previous models peak of 80,000 hit in 1999.

The early portents are good.

Loopy exaggerations

The S80s interior, despite the loopy exaggerations, is simply fabulous. The tan leather on the car I drove was beautiful, the seats comfy and luxurious, and the dash board was as impressive as, well, a snow-covered meadow on a winter’s day, to coin a phrase. I especially liked the central console, which gives the impression of wrapping around you, a bit like a Range Rover’s cockpit.

The car is a bit bigger than the old one - all new from the ground up - says Volvo, with a wider track and longer wheelbase, but that doesn’t generate much extra room inside. This extra space has been commandeered by Volvo’s safety types to make better crumple zones and passenger protection. The Side Impact Protection System has been improved with a new type of side collision airbag which has two chambers, one for the hips and one for the chest.

U.S. buyers get a choice of two engines - the top of the range V8, and a 3.2 litre 238 bhp straight six. Europeans also can choose a 2.5 litre 200 bhp petrol or two diesels - the D5 - a 2.4 litre five cylinder 185 bhp, and a 2.4 litre 163 bhp motor. The V8, from the XC-90 SUV, will be available with 4-wheel drive (also from the XC-90), and lesser versions may also progressively be available with 4x4.

No word yet on U.S. prices. In Europe, prices start at €35,200 including taxes ($44,200) for the least powerful diesel S version, and peak out at a whopping €60,299 ($76,100) for the V8 SE Lux. Everything but the S range gets leather seats as standard. The range is completed by SE and SE Sport.

Bjorn Borg

The best selling S80 in Europe is likely to be the D5, and although it was a bit noisier than expected when pressed on the roads around this southern Sweden resort and tennis centre, where Bjorn Borg started his career with a tournament win in 1974 aged 17, it powered the S80 along with terrific acceleration and quietness on the motorway. The six-cylinder automatic box was unobtrusive and efficient. Handling was impeccable, although perhaps not up to the electrifying standard set by the BMW 5 series.

Volvo said it has tuned the suspension to make the car drive much more sharply, and it offers three automatic suspension damping modes - comfort, sport and advanced.

This being a Volvo, you would expect some new ideas about safety. The S80 has Adaptive Cruise Control, which keeps the car a safe distance away from the car in front, and automatically brakes or accelerates to keep a safe distance.

Primes brakes for action

The S80 also has Collision Warning with Brake Support, which primes the brakes for action if the system detects that a collision is imminent, and flashes a warning as a head-up display suggesting you brake without delay. A blind spot indicator warns you if a car is overtaking out of sight of your wing mirror.

Even the car’s key contributes to safety. It will tell you if an intruder is in your car when you approach it at night by sensing the presence of an alien heartbeat. It will also have enough memory to tell you if you’ve remembered to lock the car.

Volvo types couldn’t stop themselves waxing lyrical about the S80. The car “radiates something nobody else can offer - Scandinavian Luxury - luxury with a smart, human touch inviting an intelligent mix of design and technology. Inside it’s comfortable like a living room experience compared with an airport lounge where you can feel the tension in the air.”

Volvo won’t win any prizes for the subtly of its high-falutin bombast, but the new S80s combination of class, safety and price makes it an interesting and appealing choice, and a capable leader of Volvo’s charge for growth.

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