Editor's note: An earlier version of this story misidentified the company where Rebecca Lindland is an analyst.
Volvo's first entry into the premium compact crossover segment, the XC40 arriving late next year, is meant by the Swedish brand to capitalize on the market's seemingly unquenchable thirst for such vehicles.
It will be a key element in Volvo's push to increase its volume in the U.S. if it can gain ground on established offerings from luxury rivals such as Mercedes-Benz, BMW and Land Rover. The XC40 will be one of three entry-luxury Volvo compacts here, joined by a sedan and wagon.
The vehicles will be smaller and less expensive than the compact Volvo S60 sedan, in the same way that the compact Mercedes CLA sedan is priced below the compact C class. The Volvo 40 series will compete with other entry vehicles such as the Mercedes GLA and BMW X1 on the crossover side and the CLA and Audi A3 on the car side.
Volvo is late to the game in the highly competitive premium compact crossover segment that accounted for 18.1 percent, of total U.S. luxury volume in the first quarter, according to registration data from IHS Automotive.
Because it has been out of the compact entry-luxury segment, Volvo wants to distinguish itself from better-established players by offering distinct styling, new safety and semiautonomous features from its larger vehicles, as well as electric-drive vehicles, said Lex Kerssemakers, CEO of Volvo Car USA.
Volvo "absolutely" needs the 40 series to increase sales -- globally and in the U.S. -- and to bring in new buyers, Kerssemakers said.
Volvo was left without compact entry-luxury vehicles in the U.S. in 2012 when it discontinued the aging S40 sedan and V50 wagon.