JEDDAH, 14 July 2003 — President of Volvo Car Overseas Stuart Kerr last week said there was no truth to rumors that the car manufacturer was in trouble and was being eyed by rivals Renault or Volkswagen.

Reports had suggested that Volkswagen wants to buy the 30.6 percent stake in Swedish rival Scania owned by Volvo, and that Renault is interested in buying Volvo if the price is right and that the two carmakers are in discussions.

“To be candid Volvo is a successful company, and there is no reason on earth for Volvo to be sold,” Kerr told Arab News during a visit to Jeddah. “We are profitable, and we generate a lot of cash. In an industry like ours rumors go around all the time. Pick a brand and I’ll give you a rumor. Regarding discussions, they will always exist between different manufacturers about the possibility of synergy. An example is that we have a deal with Mitsubishi that is coming to an end because Mitsubishi is going into a strategic alliance with Mercedes-Benz. These alliances and joint ventures only last a certain time then the parties involved look for the next one. These things are on-going,” he added.

Kerr was speaking to Arab News about Volvo’s strategy for the sluggish Gulf market.

“The region has gone through a war and has been destabilized,” he said. “It is time to get business up and running again, and it was an appropriate time to visit because I haven’t for some time. For Volvo this is the market of the future and we need to make solid plans to go forward.”

But what were the effects of the second Gulf War on the local market?

“That can’t be accurately defined because of the lack of available data, or official statistics, but the best estimate would be somewhere between 35 to 50 percent down.”

In order to help the brand survive the climate, Volvo’s regional partner Zahid Tractor have been investing more in Volvo, especially in extra showrooms and extra service facilities.

“I have discussed our strategy for going forward with our partners here, and I’m very happy that were are going in the right direction. Yes, in the last couple of years business has been slow, but based on our future plans it is a good foundation for moving forward,” Kerr said.

Volvo plans to increase regional sales by 50 percent over the next five years from 1,358 vehicles sold in 2002. Officials from Volvo said earlier there was a high potential for growth due to the high disposable income of average working households.

“Volvo’s role in this plan is to assist our partners by bringing in highly qualified consultants to drive the business forward. Here in Saudi Arabia we have retained the services of a company to research customer experiences and together with that information, and the availability of a consultant here who helps in refining process and procedures to make sure that the feedback we get can be utilized.”

This strategy, along with the introduction of new models like the award-winning XC90, and the S80 make both Volvo and Zahid Tractor confident about the future.

The XC90 has been performing especially well in the market. “Globally there is a waiting list for the car. We underestimated the demand for the car by almost fifty percent. We have increased production by sixty percent and we still can’t meet the demand.”

The situation is the same in the Kingdom, where it is currently the leading SUV in the market according to Volvo’s Saudi Arabia’s General Manager Khaja Yousufuddin.

“We’ve already won 21 awards, and we are waiting for the announcement of the Saudi auto car of the year, which we are being considered for.”