Hi,
I have had a fair amount of experience with this and in fact just bought a kit from Volvo today to change how mine is mounted.
I have a 1995 855 T5R that was equipped from Volvo with the changer and full size spare, which cause the same issues as having a third seat. No room for horizontal mount of the changer. The changer came mounted vertically on the surface of the left rear floor panel and had a molded cover that slipped over the bracket and changer for protection. This was a very half-assed fix that Volvo came up with obviously as an after thought. It was so ugly that the previous owner (my dad) removed the changer and just lived without it. The bracket for this setup is less than $15 from Volvo and i'm not sure about the cover, but it is probably the $40 cover that was spoken of in previous replies to this thread.
Apparently because of customer complaints, Volvo redesigned the vertical mount and came out with a kit that completely replaces the left rear floor panel and mounts the player halfway recessed into the well. It still sticks up, but has a hinged cover, is color coordinated to the car and even has a place for an extra magazine. This kit in Grey is Volvo part number 9164225 and has a list price of $198.00. I managed to get this from my dealer for $168.30 and he indicated that it was in stock in Volvo's Los Angeles warehouse. He told me he would tag it onto his 'critical' order and would have it for me tomorrow.
I would be happy to report on the final install and even forward a digital picture if there is anyone interested. I did see this pictured in a Volvo accessories brochure once as well. That's how I knew to ask about it. It appears to be the best solution, although not perfect, for all of us with 3rd seats or "R's" with full size spares.
As for mounting it under the front seat, this sounds like it would work OK, but it might get exposed to kicking from passengers and/or excessive heat from the ventilation system. This may be why Volvo never did that. I use my glove box too much to sacrifice it for that sort of mounting. And besides, for some reason I think it's a bit sacrilege for me to do any 'non-Volvo' mods to a yellow T5R wagon. I still think its gonna' be a collectors item someday.
Regards,
Greg
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