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Volvo execs, owner Geely impact on the direction of the brand.
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Safe, secure and discreet way of a Swedish or a luxury brand budding willing to bow to Chinese taste for excess and bling that is the debate causing ripples at the top of Volvo Car Corp. that was under Chinese property since 2010.
A cultural shock between the European direction of Volvo and Zhejiang Geely Holding Group Co the brand owner may have wider implications for corporate China If Geely Volvo prevails in refocusing on high-end market of China, could chart a course for other Chinese companies with global ambitions.
The Volvo Concept Coupe, unveiled on Tuesday at the Frankfurt Motor Show, is a sign that the Chinese property wants to throw a sober picture of Volvo and increase sales significantly by taking the established luxury brands such as BMW, Mercedes-Benz Daimler and Audi.
According to four people close to Volvo and Geely, the billionaire owner of the Chinese company Li Shufu believes China, where more than 1 2 million premium cars were sold last year, is the key to the future Volvo, and will help him hit a goal of doubling annual global sales to 800,000 vehicles by 2020.
Volvo year on year sales in China increased by two thirds in August 4319 in Car sales from January to August rose 40 percent to 37.661 cars.
To reach its goal, Li, who is chairman of both Geely and Volvo wants the Swedish automaker to come with a large luxury sedan for China's new rich who tout their social status with luxury cars German, like the Audi A8 and BMW 7 Series sedan.
Volvo managers are not on the same page Hakan Samuelsson, CEO since late last year, believes it is too risky for Volvo to abandon a niche cultivated for decades by focusing on security and sub-Scandinavian and try to take the German luxury carmakers.
Volvo will never be competition in this segment where customers expect to have a V8 or V12 engines Volvos are the 4-cylinder and 6-cylinder cars, he told reporters in June to an opening of the factory in the city of China's southwest Chengdu Showing off was never part of the Volvo brand.
Samuelsson Volvo should stick to its Scandinavian roots, partly because Chinese consumers are changing and no longer seek to flaunt their status by the possession of a German luxury car Photo credit BLOOMBERG.
Management also believes Volvo little economic sense to come up with a rival to the BMW 7-Series or Mercedes S-class because the large rear wheel drive sedans are expensive to develop and Volvo did not scale to rapid return on investment.
The Volvo compromise Li is half way creating an extended version and more luxurious in China's smaller sedan S80, now redesigned, insiders said.
We told the president Li we should stay away from a luxury flagship sedan is too long trip to do with little hope for a quick return, said a Volvo executive, who asked not to be named the discussions we have private think it is better to spend your money in areas where we can make a difference, we told him that, and I feel he is buying this.
Indeed, Li said at the event that Chengdu is ready to support traditional niche Volvo even as he tries to revamp its range, including the Coupe Concept, which is a modern version of the Volvo P1800 years 1960.
future cars I've seen, the designers introduced me, are really attractive, Li said that I feel very happy and confident that it will be a great success.
While Li publicly touts the progress the companies have made in improving Volvo technology - especially a new scalable architecture that underlies a range larger Volvo cars - two people near Li say that always trying to push Samuelsson to compete with the Audi A8, with a plusher model and he called the S100.
Sales of high-end cars, especially in the super-luxury such as Bentley and Lamborghini, are likely to slow economic growth in China facilitates and new political leadership blames lavish spending and transplantation But Li still see potential for growth in China's luxury car market, which is expected to surpass the US as the world's largest by 2020, with annual sales of about 3 million cars.
Li comments in Chengdu show a narrowing of the difference in thinking about how much to do to give Volvo upscale longer Insiders say Li is a big fan of the new style that the head of Thomas Ingenlath design brought to Volvo.
Samuelsson and its head of product strategy Lex Kerssemakers insist Volvo should stick to its Scandinavian roots, partly because Chinese consumers are changing and no longer seek to flaunt their status through owning a German luxury car This change began in several countries there years, but you also see now in China, in Chengdu Kerssemakers said.
Li, however, still believes Volvo needs a head turner flagship sedan for China, say those familiar with his thinking.
the show-off people are the main customer base for luxury cars in the world's biggest auto market, they say In a weekly conference call with Samuelsson around the Chinese New Year, Li pushed to develop a new Volvo large flagship sedan, they said.
He failed and was not too happy after that call, an insider said, as Hakan Samuelsson was not as simple as its predecessor CEO Stefan Jacoby While Li wields power, he plans to address this issue diplomatically , the person said.
Volvo management said they ostentatious Chinese consumers are not our target customers The problem is, there aren t many people in China today with good taste, said one of his relatives Li Mistresses love BMW coal mine owners and developers drive Mercedes These rich people like to show off.
Li will attend the fair in Frankfurt, then head to Gothenburg for a presentation by the Volvo management on future cars Volvo brand managers remain confident Li support the compromise of a tense S80 to appeal to Chinese drivers.
Michael Xu, a Volvo dealer in Chengdu, said there is a gap in awareness of the target audience for the Volvo brand in relation to BMW, Audi and Mercedes, and Volvo would welcome the addition of a model very high level, at a price of 1 million yuan 163,400.
This type of model could help build the Volvo brand image and increase brand awareness, said Xu.
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