Volvo previews new compact car range

GOTHENBURG -- Volvo previewed its new compact-car range by unveiling concepts for an XC40 crossover and a vehicle that hints at the next V40 hatchback.

The cars are based on the automaker's Compact Modular Architecture (CMA) developed with Chinese sister brand Geely and will include battery-powered and plug-in hybrid variants alongside versions with gasoline and diesel engines.

The XC40 will be Volvo's first compact SUV and will expand the company's product lineup into a booming segment as a rival to vehicles such as the BMW X1 and Audi Q3.

The V40 will replace the current model of the same name that competes with the BMW 1 series and Audi A3. As with the current car, Volvo also plans a high-riding V40 Cross Country variant.

"The new 40 series cars have the potential to improve our market penetration in an important growing segment," Volvo CEO Hakan Samuelsson said a press event at Volvo's headquarters here on Wednesday.

"An electric powertrain program including both a new compact Twin Engine plug-in hybrid as well as a pure electric car are central to the CMA architecture," he said.

The XC40 will be the first 40 series car to go into production, starting in 2017 at Volvo’s factory in Ghent, Belgium, Samuelsson said.

The XC40 will arrive in European, U.S. and Chinese showrooms starting next year, Volvo said, without providing a more specific timetable or revealing the rollout cadence for the compact SUV.

Samuelsson also declined to reveal the rollout plans for the other models that will make up the CMA family. In addition, Volvo did not say whether the new platform will underpin a replacement for the S40 sedan, which was discontinued in 2012. Samuelsson said that a compact sedan is definitely under consideration.

Volvo said its new compact cars will have innovative connectivity services including the ability to share a digital key to allow a family member to enter the car, plus the world’s most advanced standard package of safety features, all of which will trickle down from the automaker’s higher-end 60 series and 90 series models.

The new compact range is part of Volvo's push to boost sales to about 800,000 vehicles midterm from 503,000 last year.

IHS Automotive forecast that the XC40 will add up to 116,000 units to Volvo's sales annually. The V40 replacement will have an annual volume of up to 100,000 units, the same as the current car, IHS said.

Volvo has been modernizing production lines in an $11 billion project since Zhejiang Geely Holding Group bought the company from Ford Motor Co. in 2010.

The XC90 SUV that Volvo brought out last year was the Swedish company’s first model wholly developed and produced under Geely’s ownership.

The 40 series will involve the two carmakers’ first major joint engineering work, which saves development costs for the lower margin vehicles.

Bloomberg contributed to this report