A country with just over nine million people can hardly be expected to rely on its domestic market for prosperity. That's why Sweden's Volvo is the most export dependent of all the world's major auto makers. It also explains why Ericsson, Electrolux, Ikea, H&M and Scania trucks are world renowned. They are Swedish companies that know what people outside Sweden want.
This is all well and good, until there is a world recession. When two of the worst hit nations — the US and UK — are also your biggest export markets, you suffer. As did Volvo, and worse than German rivals who were protected by their country's relative prosperity and its unmatched loyalty to home teams. But now that the world is gingerly emerging from recession, so Volvo can begin to see the sunny uplands of success — not least in the UK, where growth in 2010 is running at about 60 per cent and comfortably out-scoring Audi, BMW and Mercedes.
"The situation was brutal, far worse than anyone could have imagined," says Volvo UK managing director Peter Rask. "I joined in January 2009 and on the day I started we sold one car across 125 dealers. Now confidence is returning."
Volvo is set to get a new owner, too, and although little is known about the precise plans of Geely, China's biggest privately run car maker, there is a real bullishness in Gothenburg, Volvo's home town. Many there will praise old keeper Ford's technical contribution — no question, Volvos have improved under its watch — and commend Ford managers who have worked tirelessly, among them current Volvo CEO Stephen Odell, who is likely to go back to Ford when the Geely takeover is consummated.
But, equally, Ford's hardships at home in the US have restricted investment in its satellite brands, including Volvo. The expectation in Sweden is that under Geely the purse strings will be loosened. It will certainly spend on Chinese assembly of Volvos. Geely chairman Li Shufu wants to make 300,000 Volvos a year at a new factory in Beijing — that's almost doubling Volvo's global production — and wants Volvo to become Europe's leading premium brand in the world's biggest car market.
As Peter Rask points out, "Volvo's home market was one of the world's smallest. Now, with Geely, the home market is the world's biggest. That must give us an advantage." Importantly, the HQ, much of the production and all the technical work will remain in Sweden. Volvo, promises Geely, will remain as Swedish as minimalist wooden furniture and blond pop bands.
Yet the newest Volvo, just on sale in the UK, is something of a departure for those sensible-shoed Swedes. Developed well before the Geely takeover — and likely to be a big seller in China, where it will be assembled for the Chinese market — the Volvo S60 is marketed on its emotional design and driving appeal, rather than its safety, solidity and space. A swoopy coupé-like design, the S60 has a styling raciness and a sporty driving appeal that will surprise those brought up on old-school Volvos.
The S60 competes with the BMW 3-series and the Audi A4. Yet a Volvo is not a Volvo without a safety advance. The S60 is the world's first car with "pedestrian detection with full auto brake". A radar and camera detection system senses a pedestrian in the
car's line of sight and, if the driver fails to respond to a loud dashboard warning, the car automatically applies the brakes.
Gavin Green is a motoring journalist and consultant
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