Volvo CEO says making S-class rival would contradict brand's image

SHANGHAI -- Volvo isn't going to develop a sedan to challenge the BMW 7 series, the Mercedes-Benz S class or the Audi A8.

Certainly not now, and maybe not ever.

In a Saturday interview at the Shanghai auto show. Volvo CEO Hakan Samuelsson told Automotive News China that such a flagship doesn't fit Volvo's "green image" and is not, in fact, the sort of vehicle that Volvo customers would even consider.

"We don't have any ambitions to go into a segment where we would compete with vehicles that have V8 or V12 engines," Samuelsson said. "We don't believe it would fit our brand image."

Talk of a Volvo luxury flagship first surfaced in 2010 after Zhejiang Geely Holding Group Co. purchased the Swedish automaker from Ford Motor Co. for $1.5 billion (9.3 billion yuan).

Geely Chairman Li Shu Fu subsequently suggested that Volvo should compete directly with BMW, Mercedes and Audi.

But Volvo's CEO at the time, Stefan Jacoby, asserted that a luxury sedan wouldn't fit Volvo's image. Jacoby stepped down last year after suffering a stroke. But his successor shows no desire to convert Volvo into a wannabe German luxury brand.

Samuelsson said he's sticking with his plan to use Volvo's new SPA platform to underpin the redesigned XC90 and generate a replacement for the S80 sedan.

Compact cars

Volvo and Geely also are jointly developing a platform for a family of compact cars -- China's biggest market segment, and arguably the segment where Geely could profit most from Volvo's expertise.

Their first effort: the five-door Volvo V40 hatchback introduced on Saturday at the auto show. Volvo will launch the V40 in China later this year.

Samuelsson says he's moving ahead with plans to launch Volvo production this year in a Geely assembly plant in southwest China's city of Chengdu, though he acknowledged he has not yet secured final government approval.

But he says he's confident he'll get that approval, and he plans to have 250 Volvo stores in China over the next couple of years, up from 150 now.

Aggressive sales plan

And Samuelsson isn't ready to abandon Volvo's goal to raise annual sales in China to 200,000 units by 2015. That's an ambitious target given Volvo's China sales of 42,000 vehicles last year, down 11 percent.

Samuelsson shook up his Chinese organization and insists that he sees "no reason to change that goal." But he left himself a loophole. If Volvo can develop good products, good dealerships and a good organization, the sales target will take care of itself.

Given the difficulties of Volvo's turnaround, that's the attitude of a realist.