Volvo S90 is likely to make its debut in Detroit in January 2017. The new S90, expected to serve as a flagship model for Volvo, would take on the likes of Mercedes E Class, Audi and BMW 5 Series which have offered serious competition to its failing S80 model.
Volvo is hoping to leverage on the Swedish reliability and design to build the S90 to challenge the Audi 6, BMW Series 5 and Mercedes E Class. The S90 is seen as a revival strategy to counter its struggling S80. While BMW sold 373, 000 units of the 5 Series, Volvo was able to put only 12, 500 units on the road last year.
Volvo’s sports utility vehicle, the XC90, was launched this year; the first model to be introduced after the Swedish carmaker was bought over by Geely Holding Group Co, owned by Li Shifu, the Chinese billionaire. Li Shufu’s company acquired Volvo for $1.8 billion from Ford Motors in 2010 and now is expecting to see positive returns on the investment.
After the successful XC90, the S90 is the next attempt by the Swedish automaker to meet its strategy of increasing yearly sales to 800,000 units by the year 2020. As Volvo’s $11 billion investment program completes 5 years, it is going into a sensitive phase and plans to introduce a slew of new vehicles to achieve its sales strategy. Volvo is working on very slim profit margins; while BMW recorded an 8.9% profit margin in the first half of 2015 that of Volvo was 2.2%.
According to the company, nearly 80% of the buyers for Volvo’s upcoming S90 are expected to be new to the Volvo brand. Alain Visser, the company’s sales chief said during a press meet at the company’s Gothenburg headquarters, ‘The S90 will be the ultimate test. Of all the cars we’ll be launching in the next four years, from my point of view, the most challenging is S90’.
The XC90 was received very positively by customers with waiting time in Sweden being as long as 6 months driven by demand pressure. Yet, customers were opting for designs and models that are priced higher including the steeply-priced plug-in hybrid model, Visser said.
Volvo has already sold 65, 000 units of XC90, beating its yearly target of 50, 000 units now itself. Volvo’s midsize SUV, the XC60 is also available in the market. The company is looking at bringing a smaller version to target the crossover customers. CEO Hakan Samuelson said, ‘If you would pick some models being the most important to Volvo, it’s the SUV segment, which is growing rapidly and you need a smaller one, of course’. He added that the demand for smaller premium vehicles is increasing which is an attractive market for them.
After the S90 Detroit debut in January, the company is planning to launch the V90 wagon model which is expected to replace the present XC70/V70 models. Volvo will be missing from the Frankfurt Motor Show this year; instead, it plans to use pop-up stores or ‘Volvo-in-a-Box’ at places like food festivals in an attempt to stay within the allotted marketing budgets.