GOTHENBURG - Volvo was in a tough spot when its merger with Renault collapsed in early 1994.
'In December 1993, we had a common platform under development with two models each for Renault and Volvo,' said Hans Wikman, Volvo Car Corp. senior project manager. 'When the merger was cancelled, nothing from this platform could be saved. Two years were lost.'
Volvo quickly regrouped. Eighteen task forces were formed to study ways to transform Volvo into a company that could produce 500,000 cars a year.
In January, 1995, development work began on a new flagship model. The front-wheel-drive sedan that resulted, the S80, will go on sale this autumn.
Volvo even made up some of the lost time. 'We were two years behind, but we regained one year by a massive team effort,' said Wikman.
The company changed its model strategy in the process, eliminating one of its three car platforms. Volvo also overhauled product development, cutting lead times by 40 percent.
'Our organization is more horizontal now, with more individual responsibilities in the decision-making process,' said Wikman.
The number of suppliers has been cut to 150, half as many as on the rear-wheel-drive S90 that went out of production in February. Eight major systems suppliers have moved into a supplier park adjacent to Volvo's Torslanda plant in southern Sweden, where the S80 is built.
Volvo reached agreements with its labor unions that allow more modular assembly. 'The Swedish mentality has changed,' said Wikman. 'The unions have become aware that if they do not share new production processes, there won't be jobs in future.'
Swedish suppliers are no longer getting preferential treatment from Volvo.
'They had to seek their own partnerships to meet our standards and quality,' said Wikman.
Volvo decided to base all its cars on two core platforms, instead of three. One will be the basis of future small cars developed with Mitsubishi Motors. The large-car platform is the basis of the S80 and future variants, plus the S70 replacement and derivatives.
Nine different configurations of the platform are possible, said Hans Carlstedt, the S80 project leader. Three alternative front steel structures can be joined with three possible rear sections.
The flexible platform can accommodate both front- and four-wheel drive.
'American customers prefer front-wheel drive, while in Europe it is 50-50 and in Asia they want rear-wheel drive,' said Carlstedt. 'But we already had the front-drive 850 and S70, so front-wheel drive was a logical choice for the S80.'
Volvo learned to become more flexible working with Mitsubishi at the NedCar joint venture in the Netherlands. At the Torslanda body shop, the S80 can be produced on the same line as the S70 and V70.
'The lessons from NedCar helped us to regain some of the two years of lost time on the S80,' said Carlstedt. 'They helped us to achieve shorter lead times for tooling-up.'
The next product off the platform will be a multi-purpose vehicle designed to appeal to Volvo's traditional station wagon customers. Production will be at Volvo's plant in Ghent, Belgium.
Volvo would not disclose overall investment on the S80, though sources say it is about SK25 billion ($3.2 billion). Wikman said that 40 percent of Volvo's development budget went for the S80 during 1995 and 1996. The company's annual r&d investment is SK5 billion to SK8 billion, according to spokesman Ingmar Hesslefors.
The S80 was designed by Doug Frasher, an American from Volvo's California studio who based the car on the Volvo ECC concept study shown at the 1992 Paris auto show. With its pronounced 'shoulders' Frasher said the new car reflects Volvo's design heritage.
Volvo plans to sell 100,000 units annually. The S80 is expected to account eventually for more than half of Volvo Car Corp. revenue, which totaled SK96.5 billion last year on sales of 390,000 units.