Things aren't going to plan for the luxury sedan.
The third-generation Volvo S60 arrived for the 2019 model year and was immediately met with great fanfare. Why? Because it was the first Volvo built in the US at the automaker's then-new 2.3-million-square-foot facility in South Carolina near Charleston. As was the case for all automakers, Volvo was forced to close this plant in late March due to the coronavirus pandemic. It reopened in mid-May but was forced to shut down again in June, but not because of an outbreak there. Instead, there are supply issues that are now causing problems for the S60.
Speaking to Automotive News Europe, Volvo CEO Hakan Samuelsson hopes to have the US factory back up and running "within some weeks" once two problems are resolved.
"First is the disturbances in the supply of parts from Mexico. But it also a supply-and-demand issue for the S60. There definitely is a market trend toward SUVs," Samuelsson said.
Volvo's first half of 2020 sales confirm this. SUVs totaled 69 percent of Volvo's global sales, and sedans including the S60 accounted for only 14 percent. In fact, S60 sales in the US alone were down by 25 percent, though global sales were up by 55 percent. The S60's final yearly total will clearly be down compared to 2019, but that's hardly Volvo's fault.
However, Volvo might now be regretting its decision to only build the S60 at its sole US plant. "Charleston really needs an SUV, which we are planning to introduce in the second step in 2022 with the XC90," Samuelsson just confirmed. "Then the factory will be fully utilized."
Volvo's strategy here is the opposite of what rivals such as BMW and Mercedes-Benz have done. Instead of building only sedans or none at all in the US, both German automakers produce hot-selling SUVs in South Carolina (BMW) and Alabama (Mercedes). In fact, Mercedes just announced plans to end C-Class sedan production in Alabama due to dwindling sales. The soon to be available factory floor space will instead be dedicated to another EQ-branded all-electric crossover.
But if Volvo S60 sales don't eventually increase back to acceptable levels, it might also meet the same fate as its C-Class sedan rival.