Volvo car sales down in May as new XC90 impact awaited

STOCKHOLM (Reuters) - Chinese-owned Volvo Car Group said sales of its cars dropped 1.3 percent in May from last year as the first shipments of its new XC90 to customers did not fully compensate for higher volumes of the old model in 2014. The Sweden-based company, owned by China's Zhejiang Geely Holding Group Co. , sold 39,919 cars in the month, with sales down 4.0 percent in Sweden and up 8.6 percent in the rest of Western Europe. Sales in China dropped 2.2 percent, while U.S. sales were virtually flat compared to a year ago. Sales in what the company calls "other markets" was the main drag in May, down 18.8 percent. However, the firm said it had now received more than 36,000 pre-orders for its new XC90 model which are not included in the latest sales data. The XC90 SUV is seen as make or break for a company moving into a premium market dominated by German rivals. It is the first fully new car produced under Zhejiang Geely, which bought Volvo from Ford four years ago, and heralds the revamp of its entire product range to more upmarket models. Volvo Car Group spokesman Stefan Elfstrom said the main reason for the sales drop was due to the product cycle, where it recently started to deliver its new XC90 model to customers. "If you look at the same period last year we had meaningful sales of the first XC90 generation, and now we have just started to ship the new model," Elfstrom said Total retail sales in the January-May period inched down 0.1 percent from a year ago. (Reporting by Johannes Hellstrom; Editing by Anna Ringstrom and Keith Weir)