‘Voluptuous’ Volvo debuts in China

Financial Times, April 20, 2011

By Patti Waldmeir

Volvo CEO Stefen Jacoby delivers his speech after unveiling a Volvo concept vehicleVolvo Cars chief Stefan Jacoby says the concept car, dubbed the Tiandi or Universe (pictured), ‘has nothing to do with Geely’ 

Volvo Cars on Tuesday gave the first sign of its design direction under new Chinese owners, unveiling a global concept car at the Shanghai car show that the Swedish group hopes will help shed its stodgy image.

The unveiling of the car – made larger, flashier and sleeker than traditional Volvos, partly to attract Chinese buyers – has been keenly awaited for the clues it could give to the working relationship between the group and Geely, the Chinese carmaker that bought Volvo Cars last year.

Geely’s purchase of Volvo Cars is the biggest acquisition of an overseas brand by a Chinese carmaker. It is viewed as a model of a successful acquisition in the automobile sector by Beijing, which is encouraging other China carmakers to look overseas for targets.

Stefan Jacoby, chief executive of Volvo Cars, said the concept car, the Tiandi or Universe, “has nothing to do with Geely” and was not influenced in any way by the Chinese company, which is run entirely separately from Volvo.

“I don’t report to Li Shufu,” Mr Jacoby said, referring to the Geely chairman, who has said that he differs with the management of Volvo Cars on the kind of Volvo he would like to see sold in China but that he will defer to Volvo’s judgment.

“I don’t see that this car has any Geely influence whatsoever,” said Bill Russo, head of Beijing-based Synergistics car consultancy and former head of Chrysler in China.

“It’s pure European styling, which should help the Volvo brand gain attention in China.”

Launching the car at the start of the Shanghai show, Volvo Cars officials made only scant mention of Volvo’s traditional brand values of safety and environmental friendliness, focusing instead on its “voluptuous curves” and “coupé-style roof line”.

Asked whether safety was no longer important to Volvo Cars, Mr Jacoby said: “We have to look for other brand values next to safety. Safety will remain a core competence, but we will maybe not directly market this as a safe car.”

Mr Russo said: “This is definitely a departure from conventional Volvo styling. This car underscores [Volvo’s] ambition to become more sporty, youthful and stylish.”

Asked what it was like to work for a Chinese owner, an obviously exasperated Mr Jacoby said: “It’s very normal. I wear a white shirt. I shave myself in the morning. I don’t speak Chinese yet.”

He said Geely had a “deep understanding of the auto industry” and more patience about return on investment than private equity owners.

Mr Jacoby expected China increasingly to influence the design of car models.

“They are developing their own distinctiveness. It is no longer coming all out of New York.”

He pointed out that the Chinese car industry was becoming increasingly competitive.

Paul Newton, analyst at IHS Automotive, in a note entitled “China moves to centre of global auto stage”, wrote: “China has clearly been a key market for global automakers for many years, but perhaps for the first time Shanghai’s annual show feels like a genuinely international affair, reflecting the new world order and most likely the shape of things to come.”

About 2,000 carmakers and component suppliers from 20 countries are participating, showcasing 75 new car models, 19 of which are making their world debuts, he said.

The growing confidence of Chinese carmakers had led to one unexpected shift in the focus of the Shanghai show, analysts said.

“The electric vehicle theme that was so prevalent in the last two [Chinese] auto shows is not as front and centre at this show,” Mr Russo said.

“Chinese car companies, which previously focused on EV technology as a way of differentiating themselves, are now emphasising conventional gasoline-powered cars more. They are not as reliant on an EV theme.”

Beijing is heavily promoting electric vehicles as an interim solution to the country’s environmental and energy dependence problems, but electric vehicle sales in large numbers are not expected for several years.

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