Volvo AB share price down, doubles marketing budget and releases new models in an attempt to boost sales

Volvo AB announced that it plans to double its marketing budget in the U.S. in an attempt to bring a new life to its stumbling business in the region that has been suffering over the last five years. An action plan, which consists of four points, has been proposed by the Chief Executive of the company, Hakan Samuelsson, who is trying to increase the sales of the Swedish company in the U.S. to 100 000 vehicles from the current 62 000.

Mr. Hakan Samuelsson, who has been occupying the position of Chief Executive Officer of the company for a year and a half now, has managed to reduce Volvos costs by 1.5 billion Swedish kronor. Mr. Samuelsson has also shifted the companys focus on the Chinese market and facilitated the opening of the first Volvo factory there.

The Chief Executive of the company also revealed in a telephone interview that Volvo plans to invest more than 6% of its revenue in research and development during 2014.

As reported by Bloomberg, Mr. Samuelsson said: “We’re in the midst of the largest investment program in the company’s history. Our goal is to be stably in the black. 2014’s quite a challenging year.” He also lifted the curtain over the upcoming release of the new XC90 sport-utility vehicle of the brand and explained that the company still has a target of selling 800,000 vehicles by 2020.

Volvo AB, which is currently owned by the Chinese car manufacturer Geely Automobile Holdings Ltd, makes most of its sales in the U.S., and China is considered the second-largest market of the brand. Due to the strong performance of Volvo in China, the company has managed to post an operating profit estimated to 2.5 billion Swedish Kroner (390 million dollars) during the second half of 2013.

Volvo AB fell by 0.59% by 8:18 GMT in Stockholm to trade at 101.30 Swedish kronor, marking a one-year change of +6.23%. The car manufacturer is valued at SEK 217.71 billion. According to the Financial Times, the 25 analysts offering 12-month price targets for Volvo AB have a median target of SEK 105.00, with a high estimate of SEK 120.00 and a low estimate of SEK 70.00. The median estimate represents a 3.04% increase from the previous close of 101.90 kronor.