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'Bloody SUV drivers'

Four to the fore: A steady decline in Volvo sedan and station wagon sales is being compensated by the rise of four-wheel drives such as the XC90.

4WD wagons are now the prime movers for Volvo

24 Nov 2004

IT’S official: Volvo is no longer a car company. It’s an "SUV" company.

Last year, half of Volvo’s Australian sales comprised XC70 and XC90 soft-roaders. In 2005, the pair is anticipated to account for almost two-thirds – a substantial turnaround from 2002, in which passenger cars accounted for 72 per cent.

The shift, brought about with the XC90’s introduction in 2003, has been something of a phenomenon for Volvo.

"We have gone from being a station wagon company to being an SUV company," said Volvo Car Australia managing director Steve Blyth.

Yet the public splurge on SUVs will only result in a clawing back of some of the ground lost over the past three years.

18 center image The company must be thanking ancient Nordic gods for the emergence of all-terrain wagons like the XC70 (left) and XC90 because were it not for them, its sales situation would be dire indeed.

The Volvo S60 sedan will be lucky to achieve 300 sales in 2004 whereas at its height, in 2001, it was comfortably the best-selling Volvo with annual sales of more than 1000. The flagship S80, once an immensely aspirational model for the company, is only managing single-digit monthly sales figures.

There are disappointing sales of the new S40/V50 range to consider as well.

It is against this background that Mr Blyth is plotting the path for the future.

Australian-born, he returned here in 2003 after working for Volvo in various South-East Asian markets (South Korea, Taiwan and Thailand) for about six years. His arrival coincided with the local launch of the XC90 and since that time he has watched the steady decline of Volvo sedan and station wagon sales being compensated by the rise of four-wheel drives – a rise accompanied by a realignment of sales pitches and marketing budgets.

"With 60 per cent of our 2005 sales to comprise XC70 and XC90, a similar proportion of our marketing budget will go to SUVs," he told GoAuto.

The big loser in all this is the V70 wagon, once popular enough to account for about 1000 annual sales but now down to about 100. The shift in buying tastes, in which the more rugged appeal of SUVs has replaced the utilitarian values espoused by regular station wagons, required something of a philosophical re-think.

"Nobody wants a vanilla wagon any more," Mr Blyth said.

Consistent with the public’s infatuation with 4WDs and the effect on regular sedans and wagons, the new S40/V50 series introduced earlier this year has made less of an impression on total Volvo sales than first anticipated.

Rather than lifting sales to, and above, levels once experienced with the previous S40/V40 series, when the figure for 2000 climbed to a little more than 1700 vehicles, combined wagon-sedan sales for the small-car range in 2004 have been managing just 80 per month.

"When the S40/V50 came, we thought there were more profitable volume opportunities. But the segment is tough – the toughest in the market," Mr Blyth said.

He added that the S40/V50 would account for about 25 per cent of total Volvo sales, with the S40 sedan accounting for around 500 units and the V50 wagon 300 units – "The V50, like the V70, is a shrinking segment." Overall, Volvo Car Australia is expecting to exceed 3000 sales in 2005, finishing at around 3300 if the forthcoming S40-based cabriolet, the C50, arrives in time.

"Although our focus is not on pure volume – it’s a question of going for volume or profitability – we do need to increase sales," Mr Blyth said.

An interesting observation regarding Volvo’s annual sales performances in recent times concerns company new-car registrations that are added to the annual sales figure each year.

"We will have 160 company car sales this year – in 2001, when the car operation was involved with the truck and bus division, we registered 700 company cars a year," Mr Blyth said.

Remove that figure from the totals of Volvo’s best year in recent times – 2001 when it sold 3542 vehicles – and the more recent annual results are seen in a different light.

Model resurgence

PLANNED new-model activity over the next few years makes Volvo Car Australia boss Steve Blyth confident things will only get better as time goes on, although he sees outside forces such as rising oil prices and the resultant flow-on to things like plastic and steel prices presenting challenges.

Regardless, the Swedish brand is on a product-led resurgence and the next few years will see some interesting new models.

"From 2006 through to 2008 there will be a lot of new products, including the cabriolet C50, a turbo-diesel for the XC90 and XC70, a new six-speed automatic transmission and a V8 version of the XC90 (to be launched in the US next year) that we’ll see here in 2007," Mr Blyth said.

Then there is the S40-based XC50 SUV, initially expected next year but now likely to join the V8 XC90 in 2007. On top of this there is the compact XC30 SUV believed to be a shared model with the next generation Land Rover Freelander, a smaller hatchback dubbed S30 and a new coupe/convertible as well as a wagon based on the S80.

Part of Mr Blyth’s job since his arrival in 2003 has been to revitalise the 36-strong national dealer network.

"We have made some relatively minor dealer network changes. The number of dealers will not change significantly, although there will be some deletions and additions to the group," he said.

WHAT’S COMING
C50 cabriolet – late 2005
S40/V50 T5 AWD – 2006
XC70/XC90 turbo-diesel – 2006
XC50 small 4WD – 2007
XC90 V8 luxury 4WD – 2007
XC30 compact 4WD – 2008
S30 compact hatch – 2008
V90 luxury wagon – 2008

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