Volvo cars CEO to move brand `upscale' to challenge leader BMW

Volvo Cars Chief Executive Officer Stefan Jacoby said he will reposition the Swedish carmaker as an “upscale” brand as he aims to take on luxury leader Bayerische Motoren Werke AG.

“I’m very committed to bring Volvo to where it belongs, in the top league of the premium manufacturers,” Jacoby told journalists today at Volvo’s Gothenburg headquarters. “We cannot say, ‘just do what BMW is doing.’ We need to find our Swedish-based definition of what Volvo should deliver.”

Jacoby, 52, started at Volvo on Aug. 16, two weeks after Zhejiang Geely Holding Group Co. bought the company from Ford Motor Co. for about $1.5 billion. Jacoby, who previously led Volkswagen AG’s U.S. operations, succeeded Stephen Odell, 55, who stayed with Ford to head its European unit.

Volvo’s efforts will put it up against better financed luxury competitors’ own efforts to challenge BMW. Volkswagen’s Audi brand aims to dethrone BMW as the biggest luxury-car maker by volume, by 2015. Daimler AG last month raised its full-year profit forecast after sales at the Mercedes-Benz brand surged in China, the world’s largest car market.

“Volvo kind of straddles that middle ground at the moment between conventional Fords and probably BMW,” said Ian Fletcher, an analyst at IHS Automotive in London. “They’re trying to shift more towards the BMW and Mercedes side of things. That will be the big issue -- the difficulty taking it to those German rivals.”

Saab’s Efforts

Swedish competitor Saab Automobile, which Dutch supercar maker Spyker Cars NV bought from General Motors Co. in February, is also trying to reposition itself as more of a premium brand. The carmaker, which rolled out the updated 9-5 model this summer, has declared it aims to directly take on Audi and BMW.

Jacoby’s first priority will be an “intensive discussion” with his management team to sharpen the brand and more clearly define what the carmaker stands for, the CEO said. The strategy must take into account Volvo’s plans for growing significantly in China, where he plans to build a plant, Jacoby added.

The carmaker will also pursue two separate loans from the European Investment Bank and KBC Bank, he said. Talks on these loans had been put on hold pending Geely’s takeover.

Jacoby started with Volkswagen in 1985 and remained there over the years, with the exception of working at Mitsubishi Motors Corp.’s European unit between 2001 and 2004. He became VW’s top U.S. executive in September 2007.

U.S. Efforts

In the U.S., Jacoby cut costs, designed the first models for the North American market, added an assembly plant in Tennessee and moved the headquarters to Virginia from Michigan.

Volvo sold 334,808 cars worldwide last year, a decline of 11 percent from 2008 and 27 percent from a peak of about 460,000 in 2007, according to the company. The automaker sold 219,461 vehicles through July this year, a 16 percent increase from a year earlier, the company said today.

In China, Volvo’s fourth-biggest market, seven-month deliveries surged 75 percent to 17,899 cars, helped by last year’s introduction of the S80L, a longer version of the S80, that’s sold only in that country, the world’s largest automobile market.