Will Volvo Become Just Another Ford?

A corporate platform-sharing drive could threaten its identity

As chief designer for Volvo Cars (VOLVY ), Peter Horbury is used to getting ribbed about his job. A few years back, an acquaintance sent him a cartoon of a white-coated technician toiling in the Volvo design department, long renowned for turning out boxy station wagons for practical souls. "In front of him, it looks like a big drawing board, but it's a giant Etch-a-Sketch, and he's turning the knobs," says Horbury. The point: People thought an Etch-a-Sketch was all a Volvo designer needed to create those sharp-edged silhouettes.

Horbury gets the point. In the decade since the 51-year-old Briton took over design at the Swedish carmaker's Gothenburg headquarters, he has skillfully rounded off some of the right angles that had characterized Volvos since the mid-1960s. His latest hit: the coupe-styled, $21,600 S60 sedan, which was launched a year ago and already accounts for a fourth of sales. To give the S60 a sporty look, Horbury drew on design cues from Volvo classics such as the 1950s Amazon, which had a V-shaped form on the front hood that vintage-car collectors still talk about.

Of such deft touches are successes made. After a deep sales slump in the early 1990s, Volvo has rebounded in the European market. In the U.S., its largest market, a shift in drivers' attitudes toward the Volvo experience has taken place. "You can have fun driving a Volvo now," says Wesley R. Brown, an auto consultant at Nextrend Inc. in Thousand Oaks, Calif. "Not only is it still the safest vehicle on the road but it's more trendy." Volvo expects to top last year's record sales of 422,131 cars and profit of $650 million. "We're a top performer within Ford," says Volvo Cars President Hans-Olov Olsson. That solid record is giving Volvo the capital it needs to launch its first sport-utility vehicle--a sturdy specimen with distinctive headlamps.

The SUV is just part of Horbury's latest challenge. Volvo, acquired by Ford Motor Co. in mid-1999, is facing homogenization. In a bid to overhaul its operations and restore profitability, Ford in January will announce a major restructuring plan that will put much more emphasis on sharing platforms and components across all brands. Starting in the next couple of years, Volvo and its sister brands in Ford's Premier Automotive Group--Jaguar, Land Rover, Lincoln, and Aston Martin--will be sharing technology, such as electronic and safety systems, and up to 30% of components. The next generation of $17,500 S40 sedans will be built on the platform of the popular Ford Focus. Volvo may use one of Ford's small-car platforms to develop its first compact.

RESTRAINED LUXURY. But once buyers get wind that Volvo is not much of a Volvo under the hood, it will be even more important for Horbury to preserve the carmaker's distinct identity. "As we share more parts, it's our job to make sure it's not noticeable," he says.

Compensating for components-sharing may be trickier for Volvo than for some of its sister marques. Jaguar, which exudes luxury down to its fancy grille, can evoke opulence with touches such as sculpted headlamps--the kind of frou-frou Scandinavian drivers don't like. At a dealership near Stockholm, secretary Marie Andersson admires the S60's restraint as much as its stylishness. If Swedish and U.S. drivers decide they dislike Volvo's platform-sharing, they may not find the styling incentive enough to stick with the brand.

The challenge for Horbury and his boss, Premier Automotive Group President Wolfgang Reitzle, is to pump up the luxury without adding flash. At last year's Detroit car show, Horbury used a 1970s Volvo coupe with a hatchback as the inspiration for a new concept car. He added safety features--like cutouts in the windshield frame to increase visibility--plus touches like seats that adjust to a person's contours. Other future models will feature more leather in the interior and dashboards that draw on Scandinavian minimalism. "The interior's an area where we have to do more," says Reitzle. Now it's up to the British-born Horbury to preserve Volvo's Swedish soul.

By Christine Tierney in Frankfurt, with bureau reports

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