With cigars and crystal, Volvo makes eyes at Chinese rich

Mon Aug 18, 2014 4:42am EDT
 
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By Alistair Scrutton

GOTHENBURG Sweden (Reuters) - With headlights shaped like Thor's hammer and space for a humidity-controlled cigar case, Volvo's new cars are sporting luxury features and designer glitz to catch the eye of the booming Chinese market and shed their safe-but-dull skin.

The XC90 SUV launch on Aug. 26 will be make or break for a company moving into a premium market dominated by German rivals.

It will be the first fully new car under Chinese parent Zhejiang Geely Holding Group Co [GEELY.UL], which bought Volvo from Ford Motor Co (F.N: Quote) four years ago, and heralds the revamp of its entire product range to more upmarket models.

It follows a five-year, $11-billion investment program aimed at doubling Volvo sales, which for two decades have been stuck at around 400,000 cars a year.

It hopes the new line will reverse declining sales in the U.S., but must persuade customers to spend up to 100,000 euros for a brand many associate with functional family cars.

"Prices will be the same level as competitors like the Germans," said Volvo CEO Hakan Samuelsson. "Customers should not expect to buy them cheaper than an Audi."

The new cars aim to reconcile strategic tensions in the 87-year-old carmaker, which remains wedded to Scandinavian understatement, greenness and an emphasis on safety, but also wants to make swanky cars that will seduce affluent Chinese customers away from the likes of BMW (BMWG.DE: Quote), Mercedes-Benz (DAIGn.DE: Quote) and Audi (VOWG_p.DE: Quote).

The XC90 has anti-collision detectors that will brake the car on dangerous left turns, and the company says its four-cylinder engine is an industry beater in terms of combining power with low emissions.   Continued...

 
The Volvo logo is pictured on a car in a car dealership showroom in Riga August 18, 2014.  REUTERS/Ints Kalnins