Volvo wants to be a premium player, but why?

Everyone is shooting for the stars.

Stefan Jacoby, CEO of Volvo Car Corp., told journalists today that the Swedish brand wants to be a premium player competing with the likes of BMW.

Jacoby, the former CEO of Volkswagen in North America, took over Volvo's helm after China's Zhejiang Geely Holding Group Co. completed its acquisition of the Swedish carmaker from Ford Motor Co. for $1.3 billion in cash.

Fellow Swede Saab, now owned by Spyker Cars, has similar aspirations to play in the premium leagues.

Both brands have lost sales.

Their products are aging and need replacement. Volvo in particular, needs to replace its XC90 SUV and add image cars at the top of the range. Saab has a product plan in place. But their plans aren't the real issue.

We're emerging from a recession. Buyers are watching their pennies and their fuel economy. Mercedes-Benz and BMW both see a future in smaller and less expensive vehicles.

And others have tried to move upscale without success -- including Subaru.

Jacoby personally learned the hard way at VW that buyers don't always see a brand the way management does. In Europe, Volkswagen moved up market but not in the United States where the Phaeton luxury sedan flopped and the premium-priced Touareg SUV is floundering. At VW, Jacoby had to reprice vehicles such as the Jetta sedan to be competitive.

Volvo builds safe, solid and reliable cars. That's a good niche in today's competitive market. Why not build a more solid foundation before shooting for the stars?

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