Volvo Cars to Roll Out New Urban Compacts in Drive for Growth

  • Carmaker to share production platform with Chinese owner Geely
  • 40-series models to be made at Belgian plant starting in 2017

Volvo Car Group, known for its sturdy wagons and sport utility vehicles, will start rolling out a series of compact models next year to compete with the likes of Audi and BMW for younger, urban consumers .

The new line, dubbed the 40 series, is set to include an SUV, sedan and hatchback as well as an all-electric model, the company said Wednesday in a statement. The cars, based on a new platform shared with Volvo’s Chinese owner Zhejiang Geely Holding Group Co., is part of a push to boost sales by about two-thirds.

Hakan Samuelsson unveils Volvo’s 40 series automobiles.

Photographer: Johan Jeppsson/Bloomberg

Volvo’s new compact cars will “have an energy, a disruptive and engaging urban character that makes them stand out among the crowd,” Thomas Ingenlath, the Swedish carmaker’s design chief, said in the statement. “This is the flavor of small Volvos to come.”

Volvo has a medium-term target of boosting deliveries to about 800,000 vehicles from 503,000 last year to compete against much larger luxury-car rivals like BMW AG and Daimler AG’s Mercedes-Benz. Urban-oriented vehicles are one of the key areas for growth in the segment. Mercedes’s push to pass BMW in sales is fueled largely by small models like the GLA SUV and CLA sedan.

$11 Billion Project

Gothenburg-based Volvo has been modernizing production lines in an $11 billion project since Chinese billionaire Li Shu Fu’s Geely bought the company from Ford Motor Co. in 2010. The XC90 SUV that Volvo brought out last year was the Swedish company’s first model wholly developed and produced under Geely’s ownership. The 40 series will involve the two carmakers’ first major joint engineering work, which saves development costs for the lower margin vehicles.

Volvo’s plant in Ghent, Belgium, will produce the new small cars. The factory has capacity to make about 300,000 vehicles annually. Geely has nine manufacturing sites in China.

“The new 40-series cars have the potential to improve our market penetration in an important, growing segment,” Chief Executive Officer Hakan Samuelsson said in the statement.

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