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Why indeed? You're quite right in your assessment that it has nothing to do with performance. The great performance cars are, after all, RWD.
The main reason goes back to the EPA fuel performance standards of the 70's and 80's. A transverse-mounted engine mounted above a direct drive transaxle weighs less. More importantly, it takes up less room. So you can make the front of the car smaller without sacrificing interior cabin space. Less sheet metal means less weight, hence better fuel efficiency. The notion that front wheel drive has better winter handling is urban myth dreamed up by a Madison Avenue copywriter in a cubicle.
I've had many a nightmarish winter ride in squirrely FWD cars, and have been stuck in snow in them a couple times. Never got stuck with my RWD 740's and 940's (not even on the 24-degree ice-covered incline with a 90-degree turn into my office parking lot). And I never put snow tires on them!
That said, Volvo's implementation of FWD is pretty damn good. (I'm skeptical of FWD, but I'm impressed by my S70. It's done well under demanding winter circumstances. Still, I wish they'd make a true performance car with RWD, or an RWD-weighted AWD system.)
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(98 S70 T5SE misc mods, mostly lighting) (92 940GLE)
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