New Volvo CEO wants to take on Bmw, report says

Article by Christian Andrei, on August 26, 2010

Volvo's new CEO Stefan Jacoby said that in the future, Volvo will be building emotional cars. He also said that the brand is considering the possibility of cooperating with rivals to gain economies of scale. A former CEO of Volkswagen's North American unit, Jacoby was appointed to head Volvo after China's Zhejiang Geely Holding Group Co. earlier this month finalized its purchase of Volvo from Ford Motor Co. for $1.3 billion in cash. 

Jacoby said that he will first prioritize further sharpening Volvo's brand positioning and the viewing of opportunities in the Chinese market. 

During his first news conference for Volvo on Wednesday, Jacoby said that it "will not just copy rivals such as BMW" but will be going upscale. Volvo stands for "safety, solidity and reliability" but the emotional positioning of the brand is not sharp enough.

Volvo would have to find a Swedish-based, unique positioning. Jacoby said that there are significant opportunities for Volvo in China. 

Geely aims to almost double Volvo's annual global production including building a new plant in China while maintaining European operations to supply the international market. He added that Volvo's size will be advantageous as it will be more agile than its rivals.

Volvo would need to consider solutions to rise above the drawback of not having the economies of scale that its competitors have. He said that there are opportunities to cooperate with suppliers, and other competitors, as well as to find synergies with sister company Geely in the future. 

Some analysts doubt whether smaller brands like Volvo (whose sales fell to 334,808 cars in 2009 from a record 458,323 units in 2007) would be able to pay for the high costs of product development. For the first time since 2005, Jacoby is hoping to return Volvo to a full-year profit. It posted a $653 million pretax loss last year.

Topics: vw, bmw, sales, ceo

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