Volvo will debut compact SUV in 2018, sources say

GHENT, Belgium -- Volvo will debut its compact SUV, expected to be called the XC40, in early 2018, sources told Automotive News Europe.

Volvo CEO Hakan Samuelsson said a compact SUV is a priority for the automaker but declined to confirm the name of the model or the timing of its arrival when asked during a visit to the automaker’s factory here.

Volvo has confirmed that Ghent will build models underpinned by its new compact modular architecture (CMA) and that it will expand its compact lineup, which currently consists of the V40 and V40 Cross Country, once the platform debuts.

Volvo is investing 200 million euros into Ghent to prepare it to produce CMA-based models.

Volvo currently builds the Volvo S60, V40, V40 Cross Country and XC60 models in Ghent, according to Automotive News Europe’s European car assembly map.

The S60 also used to be built at the automaker's factory in Torslanda, Sweden, but output of the sedan was stopped last month because the automaker needed the capacity for the XC90. Volvo said last week the second generation of its flagship SUV has attracted more than 65,000 orders globally, easily beating the its expectations of 50,000 for this year.

New V40 in 2019

The sources say that the XC40 will be the first Volvo underpinned by the CMA platform and that the new-generation V40 and the V40 Cross Country will start using the architecture in 2019.

Volvo, which was bought by Zhejiang Geely Holding from Ford in 2010, is co-developing the CMA platform sister brand Geely Auto. In April, Samuelsson told Reuters that Volvo's sales of compacts has been too small to be profitable and the automaker needed a partner that could share the costs of developing and manufacturing a competitive vehicle.

Volvo purchasing and manufacturing boss Lars Wrebo outlined the benefits of having Geely as a partner in a separate interview with ANE on Sept. 15. “If you take the architecture and powertrain, which is roughly two-thirds of the cost [of the vehicle], we have about 90 percent commonality with Geely,” Wrebo said.

Volvo’s factory in Chengdu, China, also will build CMA-based vehicles, Wrebo added.

Samuelsson, who was in Belgium last month for the Ghent plant’s 50th anniversary, said Volvo’s future compact models would have in-house powertrains, plug-in hybrid variants and, eventually, self-driving technology.

“We will not be sourcing engines from other manufacturers. Instead, we will be offering three- and four-cylinder versions of our own new engine program,” Samuelsson said. “We will also offer a plug-in hybrid for the compact models. Autonomous driving will be an option we will offer in our cars as of 2020, also in the compact lineup.”

Volvo is on track to sell 500,000 vehicles globally this year and aims to boost its worldwide volume by another 60 percent by 2020. Said Samuelsson: “Five-hundred thousand vehicles does not give us a viable future, 800,000 does.”

Douglas A. Bolduc contributed to this report