Weekly Recap: Volvo's $11-billion gamble

It's ambitious, but Volvo is spending money on core products built on qualities that have made the brand successful in the past.

Just how much does it take to revive an iconic premium brand? How does $11 billion sound? That's what Volvo's Chinese owners are spending to give the Swedish company one more shot to make it as a global carmaker.

It's a make-or-break proposition. Volvo must get it right, as even deep-pocketed parent company Zhejiang Geely Holding Corp. has limits. The money will fund a product blitz with fresh yet authentic Swedish design, improved technology, new engines and, as always, a focus on safety. It's ambitious, but Volvo is spending money on core products built on qualities that have made the brand successful in the past.

The 2015 XC90 will be the first vehicle to roll off the assembly line as a result of these efforts. As our Noah Joseph reported from the reveal in Sweden this week, the crossover embodies all of Volvo's aspirations. It's based on the company's Scalable Product Architecture that will be used for all of the company's models in North America. It draws power from the Drive-E engine series, including a 2.0-liter four-cylinder that makes 316 horsepower thanks to turbocharging and supercharging, and a plug-in hybrid variant that also uses both forced-induction systems to pump out 400 hp.

"It remains to be seen whether consumers respond well to the brand's new direction." – Ian Fletcher

"There is no denying that this is an exceptionally important vehicle for Volvo," Ian Fletcher, an analyst with IHS Automotive, wrote in a research note. "It also underlines the future expectations of the brand by management and its owner."

The XC90 begins its rollout in September, when Volvo starts taking orders for the First Edition, which will be limited to 1,927 units in recognition of Volvo's founding 87 years ago. The XC90 is also the first vehicle developed independently since Volvo was sold by Ford to Geely in 2010.

IHS projects Volvo will sell about 65,000 copies of the XC90 worldwide, with most of the sales in China. Fletcher said the XC90 likely won't match the sales figures of its predecessors in North America due to increased competition from brands like Lexus and Cadillac, as well as traditional stalwarts BMW and Mercedes-Benz.

"It remains to be seen whether consumers respond well to the brand's new direction," Fletcher said. "If it is successful, it could bode well for its further new launches in the future."

Volvo is expecting sales to increase five percent globally this year, as some of its existing models – which have been refreshed – gain traction in the marketplace. For a more significant leap, the XC90 and its upcoming siblings, will have to be winners.


Other News And Views

2015 Ford Mustang production begins

Finally! The latest generation of the iconic pony car is here. The factory is humming, and cars will arrive in dealerships later this year. But here's something you might not know: The Mustang is the only pony car from the Detroit Three assembled in the United States. The Dodge Challenger and Chevrolet Camaro are built near Toronto, Ontario, Canada.

The 'Stang, meanwhile, has rolled off the line at Flat Rock, MI, since 2004. Ironically, the site opened in 1987 as a Mazda factory. In today's global economy, most industry observers will dismiss all of this as trivia, which it is. Still, it's interesting.

Elon Musk responds to newspaper ad about Model S

It's kind of cool the billionaire captain of industry would respond to two customers, who took out an advertisement in Palo Alto, CA, newspapers to voice suggestions for improving the Tesla Model S. The couple asked to Musk – whom they addressed as "automotive visionary" – to add things like blind-spot detection, a redesigned sun visor (picky, eh?) and to move the cup holder forward.

Musk, naturally, tweeted his response, and said many of the ideas will be implemented. Interestingly, the couple also asked Musk to advertise more to raise Tesla's visibility.

The 2016 Mazda MX-5 Miata will be revealed September 3rd

Enthusiasts have had it good the last 20 months or so. There's been the seventh-generation 2014 Chevrolet Corvette, the sixth-generation 2015 Ford Mustang, two Hellcats from Dodge, and now a new Miata. Obviously, they're all vastly different cars, but it's definitely shaping up to be a golden age of sheetmetal.

As a refresher, we know the new Miata will be lighter, perhaps 220 pounds or more, thanks to a new chassis, and have driving dynamics that hark back to its first-generation. Speaking of the first gen-Miata, Mazda is celebrating 25 years since the introduction of the sports car, and another icon of the 1980s, Duran Duran, will help with the debut of the 2016 model next week.