Volvo Car Group is on a roll. It is headed toward another record sales year, led by strong global demand for its XC90 flagship SUV, and its 7.5 percent first-quarter operating profit beat Mercedes-Benz. CEO Hakan Samuelsson is proud of the achievements, but he says Volvo is only halfway to its goals. Samuelsson, 65, explained why Volvo has "a lot to do" in an interview with Automotive News Europe Managing Editor Douglas A. Bolduc.
Q: Where is Volvo in its revival process?
A: We are halfway through this process. We have completed the 90 series with the sedan, wagon and SUV. There will be more variants coming, but the top of the line is complete. We are also a long way toward the profitability we require. So then maybe you change the tone a bit and say, "Let's fully concentrate on what lies ahead of us." There is a lot to do to really reach the profitability level we need. What lies ahead is a huge challenge. But it has taken this company all the way up to being a really premium alternative.
How do you keep your team focused?
We can't sit back and relax. You have to continue the improvement on all levels, not just the cars. It has to be premium sales and services that are developed around these cars. It's also very important to really inform the customers about all of the features [offered in these cars]. A lot of challenges lie ahead. We have celebrated the first half [of the revival] enough. Now let's focus on the second half.
Was it a pleasant surprise that the XC90 nearly won the 2016 European Car of the Year award?
Being 18 points behind [the Opel Astra] with a big SUV in a very high price segment is quite extraordinary. I don't think an SUV has ever been close to that position. Plus, the car of the year winner is usually a value-for-money car. Being No. 2 is a real sign of recognition for the XC90, which I think our engineers should rightfully be very proud of. And, we have a lot of new cars coming so I think we will definitely be back.
Perhaps with the XC40 that arrives next year?
That could be the perfect one.
About 20 percent of your global orders for the XC90 are for the plug-in hybrid variant. Is that level sustainable across your entire range?
Absolutely. But while it is impossible to speculate, I think that progress often happens much faster than we think it will.
Are you even more bullish about electrified powertrains today than you were a few years ago?
We believe the market is shifting to electrification.
The cost of batteries is going down, and the range is going up. The charging infrastructure is growing. We see the plug-in hybrid as a very interesting alternative to the diesel engine.
That being said, we have a very high percentage of diesel engines in Europe [91 percent of Volvo's European sales were diesels in 2015]. We cannot simply go back to gasoline engines because CO2 would go up significantly.
Volvo wants electrified vehicles to account for 10 percent of its global sales by around 2020. How will that compare with your rivals?
We really want to be faster in the shift, which means we want to have a higher percentage of our sales coming from electrified powertrains [than our rivals]. We will not have the highest volume, but we strive to have the highest percentage. This commitment is clear. Also, by 2025 we want to sell 1 million electrified cars; this includes plug-in hybrids and full-electric cars.
This will include models from your new Compact Modular Architecture platform, right?
Yes. This platform is a very important piece of that puzzle. That is why it was designed from the ground up with electric powertrains in mind.