The 2018 Volvo S60 is “a really attractive car for younger people,” said Volvo CEO Hakan Samuelsson.
GENEVA — In a bid to boost its luxury brand image, Volvo Cars is gearing up to revive a stalled market.
After redesigning the European-centric V60 wagon, the Swedish automaker is looking to its upcoming S60 midsize sedan to grow U.S. market share in a cooling segment.
“It’s not exactly the best time to be launching a new sedan,” said Jessica Caldwell, executive director of industry analysis at Edmunds. “Folks who are trading in their cars are moving up, they want more space.”
But Volvo executives see it differently.
Volvo is looking to target young, wealthy consumers in the U.S., expanding out of its typical consumer base for the popular XC90 and XC60 SUVs. And, according to executives, a competitive offering for a luxury midsize sedan could help the automaker compete with German manufacturers, as long as it can find buyers still interested in smaller cars.
“You can view the segment as extremely troublesome or a fantastic opportunity,” said Marten Levenstam, Volvo’s senior vice president of product strategy. “It’s a very important car for us.”
The S60 will be built in Volvo’s first U.S. plant, which is outside of Charleston, S.C., and slated to open in the middle of this year. The automaker plans to employ 4,000 workers at the plant, adding the next-generation XC90 in 2021 for a production rate of 150,000 vehicles a year.
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Car sales have been on a downward spiral, and data estimates suggest the trend will continue in the next five years. Sedans made up less than 40 percent of U.S. auto sales in 2017, and are projected to fall to less than 35 percent by 2022, according to Bloomberg.
“I was skeptical when Volvo announced they were building a plant in South Carolina for the S60,” said Dave Sullivan, an analyst at AutoPacific.
“There’s really not enough demand to fill the capacity of the plant right now.”
Volvo sold 12,142 S60 sedans in 2017 and is expected to sell 17,700 in 2019 with the redesigned model, according to AutoPacific data. However, the data projects sales to gradually decrease in the following four years, down to 14,200 in 2023.
Volvo executives are confident they have a winning offering on their hands with the S60’s redesign.
“It’s a really attractive car for younger people,” Volvo CEO Hakan Samuelsson told Automotive News. “Our design line is something I think will be very popular on the S60.”
Since it began revamping its product line under Chinese ownership with the redesigned XC90 in 2014, the automaker has become more “self-confident” in its vehicle designs, Levenstam said. He added that introducing a stylish car into a less sought-after segment could boost Volvo’s image among young, wealthy buyers and increase its conquest rate.
Another draw for the vehicle will be Volvo’s subscription ownership model, which it will be offering with every vehicle introduced from the XC40 compact SUV and beyond. With a two-year fixed monthly payment service, Care by Volvo could appeal to younger consumers who prefer flexible ownership.
“With the subscription service they could do something where the surprise and delight is there for the customer,” Sullivan said. “That’s what separates the mainstream from the luxury.”