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Volvo’s XC90 signifies return, with Chinese help, of storied brand

2016 volvo XC902016 volvo XC90
The XC90 SUV is Volvo's big hope for 2016.Courtesy: Volvo

Volvo took a big step toward regaining a foothold in the U.S. and worldwide with the introduction of its XC90 full-size crossover, a vehicle that constitutes the first report card for China’s Zhejiang Geely’s acquisition of the Swedish automaker from Ford Motor (F) in 2010.

The premium seven-seater, powered by a newly-designed four-cylinder engine, will contend against models like the Lexus RX350, BMW X5 and Chevrolet Tahoe. Its arrival is critical for Volvo dealers in the U.S., who have watched sales plummet since Ford, in the midst of financial difficulties, unloaded the brand for $1.8 billion.

Volvo executives say they regard the XC90 as the first model they’ve been able to create as an independent company since 2000, when Ford bought Volvo cars from the larger Volvo Group. Volvo’s partnership with Zhejiang Geely has been primarily a financial one, which has allowed the Swedish partners to pursue car development independently.

“This is one of the most important days in our history,” said Hakan Samuelsson, president and CEO of Volvo, at the introduction in Stockholm. “We are not just launching a car but relaunching our brand.”

Under Ford’s management, Volvo reached sales of roughly 140,000 in the U.S., a level that has dropped since then to 60,000 or so, a pace that has prompted some of the approximately 300 U.S. dealers to sell or abandon their franchise. Volvo executives say the automaker’s new SPA (for “Scalable Product Architecture”), developed for XC90, will be the basis for a number of new sedans and station wagons.

Zhejiang Geely, led by its billionaire founder Li Shufu, is counting on growing Volvo sales in China, as well as a sharing of technical, marketing and design expertise that it can use to strengthen its Geely brand of vehicles.

Li, a self-made engineering graduate with a taste for poetry, founded Geely (which means “lucky” in Mandarin) in 1986 as a maker of refrigerators. The company moved on to motorcycles and finally to cars. Geely originally aimed to export its cars to the U.S. – a feat it will have accomplished, in a sense, with its $11 billion invested resuscitating Volvo and developing the XC90.

The XC90, starting at about $48,000, will begin arriving at U.S. dealers as a 2016 model next spring.

Volvo, founded in 1927, had been a niche brand prior to Ford’s purchase, known for its individualistic approach to design and innovative safety features. With the XC90, the automaker hopes to recapture its reputation, mostly with electronic features such as adaptive cruise control and front collision avoidance, meant to avert accidents altogether, rather than simply to make mishaps more survivable with fewer and lighter injuries.

The goal, say Volvo executives, is to sell 800,000 Volvos worldwide on an annual basis by 2020, roughly four times what’s selling now – an ambitious number.

And even more ambitious – perhaps unimaginable – target is Volvo’s resolve that by 2020 no one will be killed or severely injured in one of its new cars, which will be equipped with the latest safety features.

For the big automakers like Toyota and Volkswagen, Volvo’s reemergence is too small to cause concern. For the budding Chinese car industry and automotive safety advocates, the progress and fate of the XC90 will be closely scrutinized.