Volvo’s cash splash in Sweden

VOLVO Cars will pump $US11 billion ($A10.6b) into its next-generation vehicle platforms and engines, plus the manufacturing facilities that produce them, by the end of 2015.

The money will be spent developing the company’s much-publicised Scalable Product Architecture (SPA) and its new range of four-cylinder engines, which will underpin and propel most future Volvo models starting with the all-new XC90 SUV due in late 2014.

And while Volvo was bought from Ford by Chinese brand Geely in 2010, the company claims half of this massive investment will be spent in improving infrastructure in its home market of Sweden.

This investment in its home market includes upgrades and expansions to Swedish plants and the creation of a new body shop in Gothenburg, and will represent one of Sweden’s largest ever industrial investments.

SPA is designed to reduce complexity by promoting the use of modular platforms that can be stretched or shrunk to accommodate various model lines, thereby cutting costs and allowing nearly all Volvo models to be built on the same production line.

The modern architecture will feature around 90 per cent brand-new components from launch under the new XC90, and extensive use of high-tensile steel and lightweight materials like aluminium will also lead to weight savings of between 100kg and 150kg per car.

As reported, the future internal-combustion engine range dubbed Volvo Engine Architecture (VEA) will comprise solely of newly-developed, lightweight four-cylinder petrol and diesel engines with fewer moving parts and greater fuel efficiency.

These engines will be up to 90kg lighter and 35 per cent more frugal than current Volvo powertrains and are built to accommodate hybridisation or the brand’s flywheel-based kinetic energy recovery system (KERS), which redistributes braking energy to the driveline.

A new eight-speed automatic gearbox will feature alongside these engines.

This architecture and engine range debuted under the Concept You at the Frankfurt motor show in September, which previews the next-generation S80 sedan flagship that could be badged S90 due to its larger dimensions.

Other SPA recipients will be the replacements for today’s V70 and XC70 due in 2015, as well as the next-generation XC60 SUV, S60 sedan and V60 wagon models set for launch in the latter half of this decade.

Other possible projects include a third-generation C70 coupe/convertible expected in about 2014, plus a redesigned C30 light car.

According to Volvo Cars senior vice president of research and development Peter Mertens, SPA and VEA will free the company from any links to previous owner Ford. One of the last new Volvos developed under Blue Oval ownership, the V40 small car, will hit local showrooms in early 2013.

“SPA makes us technologically independent, without any link whatsoever to our previous owner,” said Mr Mertens.

“The new architecture covers about two-thirds of our total sales volume. With about 40 percent of all components shared by all car models irrespective of size, we will benefit from economies of scale, thus boosting our competitiveness.

“With lower costs for development and parts designed to be shared by all our models, there will be more capacity left for focusing on individual details that are important to our customers.” According to Automotive News, Volvo aims to boost sales to 800,000 vehicles by 2020, up from just over 400,000 currently, betting on rapid growth in demand from China where it builds cars exclusively for the local market.

However, Volvo's global sales fell 5.9 percent in January through October and the company has had to cut production at plants in Sweden and Belgium, to adjust to flagging demand resulting from financial instability in Europe.