Chapter 2

Company Profile
Company History
Volvo Cars was founded by two visionaries, Assar Gabrielsson and Gustaf Larsson. Their main
purpose in building cars was to make the safest cars possible, after the death of Gabrielsson’s wife in
a car crash. The name “Volvo”, meaning “I roll”, was originally owned by a Swedish ball bearing
manufacturer, SKF (Svenska Kullagerfabriken AB) and was intended to be used for a special series of
ball bearings. On the 10th of August, 1926, SKF Sales Manager Gabrielsson and engineer Larsson
produced 10 prototypes before officially founding the company on April 14, 1927.

On this date, the first Volvo model produced, the “ÖV4 Jakob” left the factory. This was followed by
the PV651, which proved to be highly successful. Eventually, Volvo started to make their cars
cheaper and ‘for the people’, making it accessible and affordable for many. As the company churned
out various models over time, it was in 1959 when it started getting serious about its reputation for
safety; Volvo engineer Nils Bohlin invented the now-standard 3-point safety belt, and the world saw
its introduction in the Volvo PV544. Despite the amount of money Volvo could have made by
patenting its design, they decided to release the patent as they realized it was too significant, and
had more value as a free life-saving tool than something to profit from.1 According to Volvo, more
than a million people around the world have been saved by Bohlin’s invention.

In the early 1960s, Volvo made their first sports car, the P1800, and new safety features were being
introduced in subsequent models over the next decade. In 1966, Volvo launched the 144, its most
advanced car in terms of safety: It had disc brakes all round, a split steering column and a new lock
on the three-point safety belts. The body had energy-absorbing crumple zones at the front and rear.
Even the door locks had a safety design.

The 144 also meant the introduction of a triangle-split dual-circuit brake system. The car had two
brake circuits and, if one of them failed, 80% of braking effect was still available.
The Volvo 144 was also a success abroad. In USA, the 144 complied with the new safety regulations
before they had even been made public.2 In the 1970s, the US’ National Highway Traffic Safety
Administration even ordered numerous Volvo 240s in order to set safety standards against which all
new cars on the US market were tested. Another technology pioneered by Volvo was the
development of the catalytic converter for controlling harmful exhaust emissions; the California Air

1 http://jalopnik.com/volvo-gave-away-their-most-important-invention-to-save-1069825878
2 http://www.swedecar.com/volvo_history.htm
Resources Board even called Volvo’s technology as “the most significant breakthrough ever made in
the control of vehicle exhaust emissions”. It was only in 1986, however, when these catalytic
converters were introduced in Europe.

The 1990s brought a slew of new models for Volvo as a result of its dynamic new product strategy,
having an offering in various market segments such ones for sedans, station wagons, coupes,
performance-oriented models, as well as rugged all-wheel-drive wagons. One of Volvo’s most
important independently developed models, the 850, was launched and won numerous awards for
its exceptional handling and safety features. Near the late 90’s, Volvo launched the S80, a new and
worthy challenger in the full-size executive saloon market. It also earned a number of awards for its
safety, quality, reliability, and environmental features, such as the inflatable curtain airbag, or
PremAir, which converted potentially harmful ozone in the air outside the car into oxygen.3
Until 1999, Volvo Cars was owned by the commercial vehicle manufacturer Volvo AB. Rising
production and development costs made it difficult for Volvo to operate as an independent car
maker, and it was later sold to the Ford Motor Company for $6.45 bn.
The turn of the century saw many successful new models being launched, such as the compact
saloon model S60, as well as the XC90 SUV.

Nearly a decade later, a financially troubled Ford Motor Co. reached an agreement to sell Volvo Cars
to Zhejiang Geely Holding Group of China for $1.8 bn4. Although many feared that Volvo’s Swedish
identity would’ve been lost through this sale, Volvo managed to keep its management, development
facilities, and headquarters in Sweden. Volvo has already been benefiting from the sale as China has
become one of its largest customer markets; cheaper manufacturing has also helped it result in
higher profit margins, along with the premium and upmarket image the brand commands.

3http://www.swedecar.com/volvo_history.htm
4http://www.marketwatch.com/story/ford-reaches-deal-to-sell-volvo-for-18-billion-2010-03-
28?reflink=MW_news_stmp
 Product Profile
Volvo Cars’s current model lineup ranges from SUVs and crossovers, estates and hatchbacks, to cross
country vehicles, and sedans.
The following chart specifies the various models present in each market niche:
SUV/ Crossover Estate/Hatchback Cross Country Sedan
XC90 V70 V60 Cross Country S80

XC70 V60 S60 Cross Country S60

XC60 V40 V40 Cross Country

Client Profile
Organizational Structure

On May 23, 2015, Volvo announced a new series of changes to its top-level management structure5.

5
http://www.theofficialboard.com/org-chart/volvo-cars
Market Share
Despite being a strong brand, Volvo is a relatively small producer of cars, and hence has a
comparatively miniscule global market share of 1%-2%. In 2014, Volvo Cars sold a total of 465,866
cars. The largest market, China, represented some 17 per cent of the total sales volume in 2014,
followed by Sweden (13%), the US (12%), the UK (9%) and Germany (7%). 6

Future Strategies
On Februrary 26, 2015, an interview conducted with Volvo CEO Hakan Samuelsson by Paul Horrell
for Top Gear was released, wherein the major plans of the company were revealed with regard to
the next 5 years. The article is given below7:
“It will all be done by February 2019,” Volvo chief executive Hakan Samuelsson tells Top Gear. He’s
talking about the company’s amazing plan to replace its entire lineup within four years.

That means three new 90 models - the XC90 SUV that’s just been launched, and next year both a
related S90 big saloon and V90 wagon. Those two will replace the current S80 and V70. Volvo once
dominated big European estates, so we want to see a properly modern one.

Then in 2017 there’s to be the new XC60. The current XC60 is Volvo’s fastest seller, and it tops the
sales chart for its class in Europe. A year later will come the next-gen V60 and S60. These three will
use the same platform as the 90-series, but cut down in wheelbase, width and overhangs. The result
is the size of the Audi A4 and Q5.

In 2018 comes an extra model, a smaller Audi Q3-sized crossover called the XC40. This has the same
engine family as the bigger cars, but an all-new platform. It’s followed by a brand-new V40 and S40.
The launch deadline for the V40, from Samuelsson’s quote, must be February 2019 (the V40 saloon
could technically be a bit later because it’s not a direct replacement of anything on sale now).

Back to the big cars. The XC90 gives us loads of info about the V90 and S90, and the 60-series too.
They will all have Volvo’s own 2.0-litre four-cylinder engines, diesels and petrols. The diesel goes to
225bhp. The top petrol does 320bhp by supercharging and turbocharging. “If you absolutely need a
V8 then maybe you’re not a Volvo customer,” says Samuelsson gently. “If you just want a V8’s power
and response, then our four-cylinder is OK.”

6
https://www.media.volvocars.com/global/en-gb/corporate/this-is-volvo
7 http://www.topgear.com/car-news/revealed-volvos-2019-masterplan
There will be FWD and four-wheel drive. The mainstream 4WD system is conventional, but an option
is the clever plug-in hybrid system with electric rear drive, as seen on the 400bhp T8 version of the
XC90. The suspension uses a lot of aluminium, with a Corvette-style composite transverse spring at
the back, and there’s an air-sprung option too.

But for the 60-series cars there will be some extra transmissions apart from the XC90’s eight-speed
auto. One is a manual, the other a double-clutch. The double-clutch will optionally be mated with an
electric motor to produce a front-drive hybrid. Volvo’s chief engineer Peter Mertens tells me this will
be barely more expensive than a diesel engine.

Having replaced all the engines related to Ford’s, Volvo still has a car closely related to the Focus. It’s
the current V40. But not for much longer. A year ago Volvo and its parent company Geely started a
new joint-venture to build a platform to replace it. This is called the compact modular architecture
or CMA. The engineering for the CMA is happening in Sweden, but it doesn’t use many parts from
the bigger Volvos because they would be too heavy and expensive.

Samuelsson says the Geely cars, which are for sale in China, will have entirely different looks from
the Volvos and less equipment and fewer powertrain options. “Volvo to Geely will be like Audi to
Skoda.”

The engines and transmissions for the Volvo XC40, V40 and S40 will come from the same family as
the bigger Volvos, except the cheapest engine option will be a lightweight three-cylinder 1.5-litre
170bhp version of the same petrol engine. They will also use the same screen-based control,
entertainment and connectivity setup as the bigger cars.

The first car off the CMA platform will be the XC40 in 2018. It’ll be made in front-drive and four-
wheel drive, using the mechanical system not the expensive electrical rear axle. Then in 2019 we get
the V40 and S40.

Design chief Thomas Ingenlath tells me all these cars won’t look entirely similar to one another. “The
90 cluster will look different from the 60 cluster and the 40 cluster. The XC90 isn’t a template to
scale down to the XC60 and XC40. People are fed up with indistinguishable cars in a range.”
The boss Samuelsson says Volvo will stick to nine cars - a saloon hatch/wagon and SUV in the three
sizes. He calls that a 3x3 strategy. Jacked-up Cross Country versions will come too, and long-
wheelbase saloons for China (where Volvo has three factories) but he doesn’t count them as
standalone models. But despite the lovely 2013 Concept Coupe and 2014 Concept Estate, no low-
slung two-doors figure in the plan. Volvo will be too busy.

Financial Statements