Volvo plans to hire Chinese design team to lift brand's local appeal

Volvo Cars, the automaker owned by Zhejiang Geely Holding Group Co., plans to hire a team of designers in China to cater to local tastes as the Swedish manufacturer prepares for its next model.

The designers would work at a research center being set up in Shanghai’s Jiading district, said design chief Peter Horbury. Volvo’s next model, co-designed by Horbury and predecessor Stephen Mattin and planned for 2012, will be in the premium compact segment, said Per-Ake Froberg, a Volvo spokesman. Rival vehicles would include Audi’s A3 and BMW’s 1-Series.

“If the Chinese or the Americans want more chrome on the grille, why would we say no to that just because we don’t have that in Sweden?” Horbury, 60, said in a Nov. 1 interview at Volvo’s headquarters in Gothenburg. “In a global market there’s still a cultural difference in tastes and requirements.”

China is key to Chief Executive Officer Stefan Jacoby’s goal of doubling sales to 800,000 cars in a decade. Design that appeals more to buyers in China and the U.S., the world’s two biggest auto markets, would help Volvo reposition itself as an upscale brand to take on Bayerische Motoren Werke AG and Volkswagen AG’s Audi, the luxury-car leader in China.

“If they want to get deeper into that market it’s critical they understand what’s going on in China,” said Ashvin Chotai, managing director at Intelligence Automotive Asia Ltd. in London. “It’s certainly natural that they study it very thoroughly.”

Three Plants

Volvo has no plan to release China-specific models and will focus on features for Chinese customers, Horbury said. While no final decision has been made on a design team, Volvo may hire the designers “not too far into next year.”

The Swedish automaker may build as many as three manufacturing plants in China, CEO Jacoby said in an interview last week in Stockholm. Jacoby led VW’s North American operations, including Audi, before joining Volvo in August.

Audi was the first German luxury-car maker to build a model specifically for China. The Ingolstadt-based VW unit introduced an A6 sedan in 2000 that’s 13 centimeters (5.1 inches) longer to cater to customers who want to be chauffeured, spokesman Eric Felber said. Audi began selling an extended A4 sedan in China last year.

BMW and Daimler AG’s Mercedes-Benz introduced their first cars designed for the Chinese market this year. The top two luxury-car makers each added 14 centimeters to the BMW 5-Series and Mercedes E-Class sedans. Mercedes is also considering an extended version of the entry-level C-Class sedan, Daimler CEO Dieter Zetsche said in April.

Not Just Size

Rolls-Royce Motor Cars, BMW’s ultra-luxury unit, has outfitted vehicles with unique options such as gold-plated Spirit of Ecstasy hood ornaments and starlight roofliners that depict astrological signs, said Marco Jahn, a Roll-Royce spokesman. Chinese beliefs also influence customers’ choice of colors, with red linked to luck, and buyers are keen to get vehicle identification numbers that contain numbers associated with fortune, such as “8.”

“Chinese designers would be able to send us ideas for what they would see as potentially being successful in China, and then we would blend that into our Scandinavian-flavored design,” Horbury said.

Horbury returned to Volvo in May of last year from Ford Motor Co., where he most recently headed the North American design team. He had been Volvo’s design chief between 1991 and 2002, during which time he gave a curved-shape to the previously boxy models.

Dearborn, Michigan-based Ford completed a sale of Volvo to Geely in August for about $1.5 billion.

Sloping Windscreen

The next new Volvo with Horbury as sole design chief may come around 2013, as he said it typically takes four years from design start to production.

Volvo in recent months introduced the new S60 sedan and the V60 station wagon, cars that maintain Scandinavian clean lines while adding sportier features like the wagon’s sloping rear windscreen. Volvo aims to sell 380,000 cars this year. In China, it sold 24,489 cars through October, an increase of 45 percent from the same period a year earlier.

Volvo needs to pay more attention to details such as how it feels to turn the door handle or the smoothness of the air vents, Horbury said. Audi “has been doing that for years now. They’ve led the way in what I call perceived quality,” he said.

By late next year, Volvo plans to roll out test fleets of its electric vehicle in China, California and European markets including Belgium and the Netherlands, said Lennart Stegland, head of Volvo’s special vehicles unit, in a separate interview. Volvo started taking orders for its electric car last month in Sweden, and will start deliveries in April, he said.

Volvo aims for its electric car and its plug-in hybrid, which will be released in 2012, to start making a profit in two to three years and together account for as much as much as 6 percent of deliveries by 2020, Stegland said.