When he takes over as president of Volvo Car Corp. next month, Hans-Olov Olsson will have a clear but daunting task: Raise worldwide vehicle sales 50 percent in the next five years while doubling profit margins.
Olsson will lean heavily on what he has learned as CEO of Volvo Cars of North America. Since he took that job in late 1998, Volvo's North American sales set a record last year and are up sharply again in 2000. And North America will be counted on to provide a big part of Volvo's growth in the years ahead.
Olsson, 58, takes over from Tuve Johannesson, who will step aside July 1. Johannesson will continue with Volvo in a nonexecutive role as vice chairman.
Olsson's appointment deepens the mark of Wolfgang Reitzle, head of Ford Motor Co.'s Premier Automotive Group. Since joining Ford early last year, Reitzle has picked new chiefs at Jaguar, Land Rover and now Volvo. Reitzle also has put his former colleague from BMW, Vic Doolan, in charge of Premier marketing in North America. And Reitzle is in the process of selecting a new head of Aston Martin.
For Volvo, Reitzle wanted an executive with a strong automotive background. Johannesson, president of Volvo Car since 1995, is known as a strategic thinker. But most of his career has been in the packaging business.
Reitzle expects Volvo to grow as the worldwide volume leader of Premier. Volvo sells about 400,000 cars annually, but has set its sights on 600,000 by mid-decade.
'More importantly, besides the volume ambition, we want to double our profitability,' Olsson said.
Ford has charged its luxury divisions with achieving the same profit margins as archrivals BMW and Mercedes: 8 percent. In 1998, the last full year before Volvo was acquired by Ford, Volvo earned a margin of 3.7 percent.
Much of the sales growth will come from North America, where Volvo sold a record 125,218 cars in 1999. Olsson wants to sell 200,000 units there annually in 2004.
He will count on a broader range of products to get there. He must oversee the launch of the remaining three cars on Volvo's large-car platform, known as P2X. Those include the Cross Country, an all-wheel-drive version of the V70 wagon, due out this summer; a sport sedan, probably to be called the S60, due out this fall; and a crossover vehicle designed to compete in the sport-utility segment, expected to appear within two years.
Then Olsson and Volvo's product team must sort out Volvo's small car puzzle. That means deciding what to do with the next-generation S40 and V40, which are produced at the NedCar factory in Born, Netherlands, in a joint venture with Mitsubishi. That venture will end in 2004, when the current models go out of production. Volvo will then make the cars on a platform shared with a Ford - either a Mondeo or Focus.
Olsson, who has been president of Volvo Cars North America since 1998, is being brought back to Sweden for several reasons: his strength as a marketer, the breadth of his experience, his 32-year history with Volvo, his toughness and his track record driving Volvo to record sales in North America. Olsson is also familiar with manufacturing issues, having managed several plants early in his Volvo career. He is a former president of Volvo Cars Japan.