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Volvo Feels Need for Speed

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2004 Volvo S60R (3/30/2003)
The staid Swede gets some much needed speed.

The American automotive market is fragmenting into low-volume niches. While there’s still room for a few high-volume nameplates like the Toyota Camry and Honda Accord, most analysts forecast that in the future, winning products will be those that can be sold steadily in lots of just 150,000 or less.

That’s good news for niche players like Volvo, which has always appealed to small target markets. But picking the right niches isn’t always easy. And there’s no guarantee the competition won’t launch a challenge.

Over the decades, Volvo’s name has become synonymous with safety. But other automakers aim to loosen its grip, loading their own products up with airbags and other safety features. So the Swedish automaker is shifting gears. With the launch of the new S60R sedan and V70R wagon, Volvo hopes to show that safety and speed are not mutually exclusive.

Fastest Volvos ever

The 300-horsepower R cars are the fastest and most powerful vehicles the Ford Motor Co. subsidiary has ever imported, the S70R capable of launching from 0-60 mph in about 5.5 seconds.

Company officials admit they’re not quite sure how potential buyers will react to the idea of a Volvo muscle car. Jay Hamill, the product launch manager for the “R” cars, believes the company’s fundamental focus on safety will “provide a sense of permission” to those who feel their first focus has to be on protecting their families.

Even so, Volvo will test the waters carefully, with global production of the S60R/V70R pair limited to 7500, about 4000 of those coming to the U.S.

How far to expand the concept is still under debate. An “R” version of the top-line S80 sedan will hit markets within the coming year. For the moment, Volvo has chosen not to launch a complete “R” brand-within-a-brand, along the lines of BMW’s “M” line and Mercedes’ AMG. But that decision “is not locked in stone,” stresses marketing executive Marti Eulberg.

Suggesting there’s already a bit of an “Internet buzz” developing around the new, 300-hp models, Eulberg says that “If our customer base demands it, we’d be missing out not entertaining” the idea of a complete R-car lineup.

Odd labeling

Said to stand for “refined,” the “R” label strikes some observers as an odd choice, as it is the same designation used by Jaguar for its own high-performance sub-brand, which includes vehicles such as the XKR and S-Type R.

With or without an "R" badge, Volvo's performance push will continue to grow. The automaker is not-so-quietly finishing up work on an all-new sports car, its first since the legendary 1800 was abandoned in the era when Baby Boomers were still in college.

There are signs that buyers are ready and waiting. U.S. dealers report they’ve already booked 1000 orders for the S60R and V70R, a sign that the Volvo brand does have some stretch to it. Another indication is the success of the automaker’s first sport-utility vehicle, the XC90. Since its launch, last year, the SUV has been greeted with a stream of awards and accolades, among others winning the title of North American Truck of the Year from a jury of 50 journalists.

The reaction actually caught Volvo a bit off-guard, demand quickly outstripping allocations. “We’re trying to increase XC90 production,” Eulberg says, though for the moment, she expects to get only a few thousand more of the utes than the 38,000 originally planned for 2003.

Volvo officials admit they’re worried that with a steady stream of new SUVs and crossovers hitting market in the months to come that shortages and dealer surcharges could actually work against the XC90’s long-term success.

There is an upside, as well, the XC90 providing a halo around the broader Volvo brand. Dealers report seeing the sort of shoppers that would never have walked into the company’s showrooms before. But Volvo is only going to have to build on this foundation.

Expanding pressure

The Swedish marque is under significant pressure to expand its lineup and volumes. Part of Ford’s Premier Automotive Group, or PAG, Volvo is considered the brand with the most significant growth potential. And with PAG committed to deliver 30 percent of Ford’s global profits by mid-decade, Volvo will be pushed to deliver its share.

Anything less would pose serious problems for a nameplate that cost Ford $6.5 billion to buy in January 1999. Ford officials have dismissed out of hand speculation that they might sell off Volvo, but the rumors refuse to go away, and have hurt company morale.

So it will be critical for Volvo to follow the success of the XC90 with another hit. And to do that, the carmaker needs to show it can stretch the definition of its brand to include speed, as well as safety.

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