The Best 2021 Volvo S60 is Underpriced

Here’s the scenario: you’re interested in getting a compact luxury sports sedan, and you’re thinking about treating yourself to something that’s really quite nice. The usual Teutonic names come into play here: Mercedes, Audi, BMW, along with some others: Tesla, Genesis, etc. And then you think about looking into Volvo’s offerings - which you end up getting, because it’s so terribly mispriced compared to the competition.

Here’s a bunch of MSRPs (which, I know, isn’t what people will actually pay at the dealer, but nonetheless is a solid benchmark) for mostly-comparably-equipped sedans: all wheel drive, a heads-up display, automated parking, traffic-aware cruise control, a sunroof, and whatever free seats/paint color/wheels were available. You might have different preferences than I do, so the numbers might vary person-to-person.

  • Volvo’s S60 Recharge Inscription is basically the best S60 you can buy. It comes standard with basically everything, to the point where the only option worth adding (at least, for someone living in Texas) is the $200 automatic parking feature. MSRP + Destination comes out to $51,895, for a 400-horsepower plug-in hybrid with AWD. It also comes with a tax credit of $5,419, making the “actual” price $46,476 (for those who qualify, and I assume most people buying these kinds of products qualify).

  • Genesis’ G70 3.3T AWD came to $49,225. It lacked the heads-up display, but was otherwise well-equipped and easily one of the higher-value plays available.

  • Tesla’s Model 3 Long Range AWD was $47,190. There aren’t many options available, but it’s easily the most tech-focused product, which causes some polarization among shoppers.

  • Audi’s A4 Prestige 45 TFSI quattro S tronic (what a mouthful!) also comes equipped well without having to select options, so it tips the scales at $50,845. The A4 has 261 HP, so about 35% less power to show off four rings. The sportier S4 starts at $50,945 and goes up to $59,245 for the top trim.

  • BMW’s 330e xDrive is also a plug-in hybrid similar to Volvo’s. Equipping it comparably (build code: EF92K7CW) resulted in an MSRP of $54,870, though the tax credit would reduce it by $5,836 down to $49,034. Once again, it’s much less powerful than the Volvo: 288 HP just won’t cut it. The M340i starts at $57,695 - before any options.

  • Mercedes’ C 300 4MATIC came to $52,700. Once more, this version is relatively underpowered at 255 HP, while a more fair competitor would be the C 43 AMG that starts at $57,550 (adding options to make it comparably equipped pushed us to $63,700).

Of course, brand name can definitely justify some level of price premium between different competitors. Mercedes, BMW, and Audi are probably the first three names that you think of when someone says “luxury car”, which allows them to charge more. The Volvo has a solid but not stellar reputation among reviewers (Car and Driver ranks it #8, MotorTrend ranks it #4, Edmunds ranks it #2; meanwhile, the G70 gets top marks from everyone), which means that pricing power shouldn’t be too affected either way (though it’s not like that many shoppers are reading reviews thoroughly).

So why exactly are Genesis, Volvo, and Tesla operating at a different price bracket? Are Volvo shoppers not comparing the prices to German rivals? Perhaps that, or perhaps these companies are still in brand-building mode whereas the Germans are cashing it in. Perhaps Volvo dealers have a hard time convincing and explaining to buyers the mechanics of the tax credit.

internal pricing

The truly crazy thing to me is how Volvo’s pricing doesn’t even make sense within its own portfolio. The non-hybrid T5 AWD trim of the S60, matched option-for-option, makes 150 less horsepower yet costs $47,395. Adding the hybrid electronic bits gives you much more power, a more economical to drive vehicle, and saves you nearly a thousand dollars to start! What’s going on here? Volvo ought to be able to increase the price at least by a few thousand dollars. Why would anyone buy the T5 AWD trim otherwise?


Update

I asked this question on Reddit, where it was pointed out to me that MSRP is only loosely correlated with the actually important metric at play: leasing costs. Volvo’s leasing prices are apparently disproportionately higher than competitors, which explains the apparent “mispricing” vis-a-vis external competition.

Does that fully explain the “internal” product portfolio pricing? I’m sure that there’s something at play that involves production quantities, or perhaps government mandates to sell X% of electric/plug-in hybrids to avoid fines.