Volvo Cars has finally revealed its much anticipated first compact crossover, the XC40.
IHS Markit perspective
- Significance: Volvo Cars has finally revealed its much anticipated first compact crossover, the XC40.
- Implications: The vehicle will compete in the fast growing premium end of this category, and offer a range of innovations in terms of technology and ownership options.
- Outlook: IHS Markit expects global sales for the XC40 to peak in 2019 at 119,600 units, making it the automaker's second biggest selling model behind the XC60. Thanks to the addition of this model and the replacement of other vehicles in its line-up during the next few years, we see the automaker's global sales growing from around 532,300 units in 2016 to 715,900 units in 2019 and 746,000 units in 2021.
Volvo Cars has finally revealed its much anticipated first compact crossover. The XC40, revealed today (21 September) at an event in Milan (Italy), will be the first of the brand's vehicles to use the CMA compact vehicle architecture that has been developed by China Euro Vehicle Technology (CEVT), and will also be used by Geely and Lynk&Co. Its look has been inspired by the styling cues of other recent models such as the "Thor's Hammer" headlights and L-shaped rear lights, but it has a far chunkier look that is similar to the 40.1 concept shown during 2016.
Volvo has said that the XC40's interior offers "a radically new approach to storage inside the car". This includes shifting the location of some components to offer more functional locations in the doors and under seats, as well as a special space to inductively charge a smartphone, a fold-out hook for small bags and a removable waste bin in the centre tunnel console. It also benefits from the same touchscreen system as the large 60- and 90 Series models, which turns the dashboard into three "islands" joined by bridges.
In terms of technology content, the automaker has installed a whole host of infotainment and connectivity functions that are based around the large centre screen. In line with Volvo's focus on safety, this model chooses from the suite of the technologies that the brand has at its disposal including Volvo Cars' Pilot Assist system, City Safety, Run-off Road protection and mitigation, Cross Traffic alert with brake support and 360° Camera.
On the powertrain front, the XC40 will be available from launch with the brand's D4 diesel or T5 gasoline (petrol) four-cylinder Drive-E engines. Further options will be available in due course, including hybridised and pure electric versions. It is also planned to be the first Volvo to be available with the automaker's new three-cylinder engine.
Alongside this, Volvo has also launched a new ownership model in its "Care by Volvo" subscription service. Inspired by smartphone contracts, Volvo says that it will offer a "national, ready-negotiated monthly fee." This means that customers will not be faced with extras such as down payments, insurances, taxes, service fees and geographical or customer age-related differences, and the car will be replaced every 24 months. The scheme will also offer a range of digital concierge services, such as fuelling, cleaning, service pick-up and e-commerce delivery to the car. Customers using Care by Volvo will also be able to share their car with friends and family with a new digital key technology.
One the announcement, Volvo's president and chief executive officer (CEO) Håkan Samuelsson said, "With Care by Volvo, we introduce a new car access for the modern age. In a time where consumers are used to transparent flat-fees for all sort of services, the traditional process of buying and owning a car can be perceived rather complicated. Care by Volvo changes all of that."
The scheme will be made available first in Sweden, the United Kingdom, Germany, Spain, Italy, Norway, Poland and the United States. Other markets are set to follow at a later date.
Outlook and implications
Volvo will be looking to repeat the success that the brand has already had with the larger XC60 and XC90 with the impressive looking new XC40. It will be entering the highly competitive and fast-growing compact crossover space at the upper end. Demand for this type of vehicle in the premium category has been rising in recent times with a growing influx of models. This includes the Audi Q3, BMW X1, Mercedes GLA, Mini Countryman, Land Rover Discovery Sport, Range Rover Evoque and Lexus NX. Global sales have jumped from just 64,500 units in 2007 to 1.147 million units in 2016. With the recent introduction of the Jaguar E-Pace, the launch of the XC40 and others set to come, IHS Markit expects this category to rise further to 1.68 million units by 2020.
Early indications suggest that the XC40 will make a significant contribution to Volvo's future volumes. Sales of this vehicle are expected to peak in 2019 at 119,600 units globally, according to IHS Markit forecasts, making it the automaker's second biggest selling model behind the XC60. Key markets are expected to be China, United States, United Kingdom and Sweden. However, it remains to be seen if its focus on appealing to young urbanites and this new ownership model will have a positive impact. Even so, thanks to the addition of this model and the replacement of other vehicles in its line-up during the next few years, we see the automaker's global sales growing from around 532,300 units in 2016 to 715,900 units in 2019 and 746,000 units by 2021.
Production of the XC40 will take place at Volvo's facility in Ghent (Belgium) beginning in November later this year, and this will be followed by manufacturing in China from 2018, according to IHS Markit forecasts. As mentioned, the company is expected to offer a wide variety of powertrains options, and notably those featuring electrification. However, we do not seen it as offering an entirely electrified line-up (i.e. mild-hybrid, plug-in hybrid and battery electric) until the early years of the next decade in line with the automaker's previously announced strategy.
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