On Thursday, Volvo Cars, the Swedish automaker, announced it will start vehicle assembly operations in India this year. This positions the company for further growth in the fast-expanding premium car segment. The assembly operations will be located near Bengaluru and will focus on models based on Volvo’s Scalable Product Architecture (SPA). XC90 SUV will be the first model slated for local assembly, while additional models will be announced at a later stage.
Volvo Cars is working with Volvo Group India —the truck, bus, construction equipment and Penta engines manufacturer— for local production and will make use of the group’s existing infrastructure and production licences near Bengaluru. Officials didn’t disclose any further contract or financial details.
“I am pleased that, as of this year, we will be able to start selling Volvo cars that are made in India,” said Håkan Samuelsson, president and chief executive of Volvo Cars, in Gothenburg, the company’s global headquarters in Sweden. “Starting vehicle assembly in India is an important step for Volvo Cars as we aim to grow our sales in this fast-growing market and double our market share in the luxury segment in the coming years.”
Tom von Bonsdorff, MD, Volvo Auto India, added, “It’s a sign of the company’s strong commitment in India. Backed by a robust sales growth, expanding network and an array of new product launches, the local assembly will provide us an impetus to garner a sizeable segment share in the medium to long term. We are sure to build a strong foundation for our business in India.”
While the Indian luxury car market is still relatively small—at about 36,000 unit sales per year—it is forecast to grow rapidly. Volvo currently has a segment share of close to 5% and aims to double this by 2020. “Volvo Cars in India had a 32% growth in sales volumes in the past two years and the 2017 trend is as per our plan to achieve 2000 cars, this will give us a growth of 25% y-o-y,” Bonsdorff added.
Volvo Auto India, the subsidiary of Volvo Cars, established presence in 2007 and has, since then, been selling cars under the CBU import route. It currently sells nine luxury models, including XC90 T8 Excellence – India’s only plug-in hybrid SUV. Last month, the company had launched its performance car brand, the Polestar, in India.
(The author is in Sweden at the invitation of Volvo)