Can Volvo Survive?

Word came today that Volvo will lay off another 3,300 employees. That brings its total layoffs this year to 4,800 — not including 1,200 consultants — or approximately one-sixth of its workforce. The layoffs are due to poor sales, which the company blames on the economic downturn. In September, sales were down a whopping 51.8%.

However, we’ve noticed a downward trend in Volvo sales that goes further back than the past month. So far in 2008, the brand’s sales are down 25.8% despite having a number of new models for sale. Not only are these models — including the S80 sedan, V70 and XC70 wagon — recently redesigned, they’re generally less expensive than their competitors, extremely safe and well-regarded by Cars.com’s staff. 

Where is Volvo missing the boat if it’s designed and introduced good new cars?

Someone dropped the ball with marketing the S80, V70 and XC70, which all debuted over the past year. The same platform underpins the new Lincoln MKS, which is outselling all three Volvos combined. The cars are sensible, safe and affordable alternatives to German luxury brands, and there aren’t many Japanese vehicles that compete with them. 

Older models like the S40, V50 and S60 have withered on the vine, but used to be volume sellers for the brand. Volvo is supposedly working on a single replacement for all three, which should help.

The funky styling of the C30 hatchback and its spirited driving experience have fallen flat with consumers. It’s Volvo’s most affordable car, but the company sold just 265 of them in September. The problem could be that its price is a few thousand dollars higher than a Mini Cooper and it gets significantly worse gas mileage.

Volvo needs to strategically rethink what it’s doing with its high-volume models while it prepares to launch a new midsize SUV, the XC60. If that SUV follows the success of the larger XC90 — Volvo’s most expensive vehicle and its best-seller — the company could survive long enough to revamp the rest of its lineup.