The new Volvo S80 is poised to replace the smaller S60 saloon in a radical product plan overhaul under consideration at the Swedish car-maker.

Volvo has yet to commit to a replacement for the S60, and is mulling whether the investment would be more profitably spent on new models like a cross-over, MPV, coupe or sports car that would expand Volvo's range.

"For the future, Volvo has to maintain its existing sales, but also enter new segments and we have to decide where to put our pot of investment cash," said Volvo's product planning chief Lex Kerssemakers.

Although Kerssemakers won't link the future of the S60 to the new XC50 SUV, Volvo is poised to give the compact 4x4 the green light this year. The future of the V70 is secure, too, that's the new wagon to be revealed at Paris in September.

New Volvo design chief Steve Mattin, whose work at Mercedes included the strong-selling SL, also believes Volvo should explore the sports car market: "There is potential out there. Sports cars add sex appeal but these are strategic decisions that must be taken."

The final decision lies at the highest level in Ford/PAG. "If it was up to me, there will be a new S60, it sells well in the US and I would be extremely reluctant to let it go," said Kerssemakers.

The future of the S60 is also tied in with the next generation S40/V50, due in 2010. Inevitably the S40 will grow in length to over 4.5m — matching the BMW 3-Series — and closing the gap on today's 4.58m S60.

At the same time, the new S80 has been conceived as a sportier model and its overall length maintained at 4.85m, squeezing the S60 between a bigger S40 and sportier S80.

As the S40 pushes up market, its place in the model range would be taken by an expanded range of C30-derived hatches and saloons to maintain Volvo's market coverage.

But dropping the S60 could throw a major spanner in the works of Volvo's plan to expand production by 150,000 cars to 600,000 by 2009.

The S60 is currently worth 60,000 sales, although it peaked just after launch in 2000 with 100,000 sales.

Although the plan looks logical in the long-term, in the short-term Volvo faces a struggle to convince S60 owners that a bigger S80 or smaller S40 will do the same job or else move them into the new XC50 4x4, otherwise they will buy cars from the competition.

Julian Rendell