Volvo is aiming to shift U.S. sales into higher gear But executive says company won't enter SUV market

October 25, 1997|By Sean Somerville | Sean Somerville,SUN STAFF

A decade after Volvo sales peaked in the United States, the Swedish company known for boxy, safe cars is plotting a comeback in a vastly changed market -- without a truck or a minivan.

In an interview during a visit yesterday to Baltimore, Helge Alten, president and CEO of Volvo Cars of North America Inc., reminisced about the middle 1980s, when annual U.S. sales topped 110,000.

"Those were really the golden years for us in America," he said. "We didn't have the Japanese, and we didn't have SUVs," sports utility vehicles.

Volvo's U.S. sales, which reached 111,000 cars in 1986, were 87,000 last year. Sales are expected to hit 90,000 this year.

But while the market has undergone a huge transformation, Volvo has not. The company, sticking to its reputation for producing safe and environmentally friendly vehicles, never produced a truck or a minivan.

Gas guzzling SUVs would never survive in Europe, where fuel consumption is discouraged, Alten said. And Volvo contends that SUVs are not as safe as automobiles. So producing an SUV would be a bad move.

"There would be an outcry," Alten said, "not only with the Swedish government but also with the Swedish population."

But SUVs might not be as dangerous as Volvo contends.

According to a study by the Insurance Institute for Highway Safety, the Ford Explorer was involved in the same low number of fatal accidents as the Volvo 900 series, Fortune magazine reported in June.

In fatal collisions between light trucks or SUVs and cars, 80 percent of the fatalities occur in cars, according to the National Highway Traffic Safety Administration.

Volvo's failure to produce an SUV wasn't the first time the company failed to cater to American whims. Preferring Swedish simplicity to American convenience, the automaker was slow to add electric windows.

Still, Volvo retains a 1 percent market share in the United States.

Now the company is trying to capture SUV customers with a station wagon that it touts as having the pluses of an SUV without the minuses.

The Volvo V70, which features an "all-wheel drive system," sells for about $36,000.

The car captured the top overall rating from Consumer Reports magazine in a field that included five competitors. But with prices of competitors ranging from $17,000 to $25,000,the V70 was the priciest by far.

In addition to trying to capture the truck market with a car, Volvo wants to expand its family-catering market to segments that include what Alten calls "pre-family" and "post-family" customers.

The idea is to keep the safe, environmentally aspects of Volvo's reputation but shed its boxy, no-fun to drive rap, Alten said.

The moves will simultaneously position Volvo to compete with Honda and Mercedes Benz. Alten said the move wouldn't be unusual for Volvo, whose products are considered luxury cars in some countries and slightly upscale brands in others.

Volvo's task is complicated by production setbacks it suffered in the early 1990s, when it considered and later scrapped a joint partnership with Renault.

To move cars in the U.S., Volvo has persuaded many of its 360 U.S. dealers not to share their floor space with other car manufacturers. The reason is that the company is seeing sales at its exclusive dealerships increase.

"If you have an exclusive dealership, they take better care of the customers," he said.

Pub Date: 10/25/97

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