Volvo Chief rethinks production, car Lineup

Volvo Cars' new chief exetive said he aims to streamline the Swedish auto maker's production and potentially its model lineup in an effort to return the brand to its roots as a premium manufacturer of safe and durable cars.

Stefan Jacoby, who took charge of Volvo six weeks ago after Chinese car maker Zhejiang Geely Holding Group Co. completed its acquisition of the company from Ford Motor Co., said Volvo would examine its entire product lineup and processes. It plans to map out a new strategy over the next few months to reposition the brand and boost sales.

Stefan Jacoby says it is too early to say what sort of changes Volvo might make to its product range or which models might eventually fall by the wayside.

"We have to question everything to make sure we're doing things the right way," he said in an interview at the Paris Motor Show.

One decision is certain, he said: Volvo has no plans to follow other premium auto makers into a wider range of niche segments, such as the subcompact luxury models that BMW AG, Volkswagen AG's Audi and others have ventured into over the past decade.

"With the kind of volume we have, we need to focus on our core products and not copy what our competitors are doing," he said.

After two years of losses, Volvo reported a profit for the first half of 2010 and is expected to earn money for the full year, said Mr. Jacoby, who left his post as head of Volkswagen's U.S. operations this summer to take the top job at Volvo.

But critical to sustaining that will be boosting sales. At its peak, in 2007, Volvo sold nearly 460,000 cars world-wide, but sales fell to roughly 330,000 last year. Volvo says this year's sales are likely to rise to 380,000.

Both Geely and Mr. Jacoby have made clear Volvo's plans to push hard into its new Chinese owner's home market, where Geely has said it wants to build as many as three plants to make Volvo cars.

The goal is to boost Volvo's sales in China to 300,000 annually from just 24,000 vehicles last year—and to double Volvo's global sales in the process.

But Mr. Jacoby added that the U.S., still Volvo's biggest market despite dwindling sales, would remain an equal priority and that it was critical that annual sales there reach 100,000 cars. Last year, Volvo's U.S. sales declined 16% to 61,435 and through September of this year have fallen 12% to 41,118 cars from the same period a year earlier.

"We're losing ground right now in the U.S., and we have homework there to do," he said. The company is hoping its newly redesigned S60 sedan, which arrives at U.S. dealerships later this year, will help turn around sales.

Mr. Jacoby said he also is intent on "reducing the complexity" that has evolved at Volvo over time. At one of its plants, he added, the car maker uses 63 different types of fuel tanks for its vehicles.

He added that it was too early to say what sort of changes Volvo might make to its product range or which models might eventually fall by the wayside.

The company, though, plans to reinforce its traditional Scandinavian design elements and invest further in developing more of the safety features that burnished the brand's image.

"This is a brand with a fascinating history and a very good reputation," he said. "We just need to come back to our core values."