India to be Volvos 2nd largest manufacturing hub

Written by Jaishankar Jayaramiah | Updated: Oct 26 2011, 08:38am hrs
Swedish commercial vehicle (CV) major Volvo, one of the worlds biggest automobile corporations, is lining up further investments in the country. At a time when domestic CV manufacturers were projecting their sub-R25 lakh vehicles as luxury coaches, Volvo introduced premium products in the price band of R70 lakh to R1 crore and succeeded. Today, its buses are plying across 12 cities in the country. Hakan Karlsson, president and CEO of Volvo Bus Corporation discusses with FEs Jaishankar Jayaramiah the corporations plans for Indian in the immediate future. Excerpts :

How important is the Indian market for you

India will play a major role in Volvos growth. Being a global player, we are eyeing business across the world. If there is downturn in one region, it can be balanced in other geographical areas. Though there is a slowdown in the north American market, sales in Asian countries, India and China in particular, are encouraging. India will be one of our global hubs for select models. We have built a strong footprint in India for the past 10 years. More than 5,000 vehicles are plying on Indian roads. We have 70% market share in the inter-city luxury coach segment and 50% share in the low floor air-conditioned city bus segment.

Can you elaborate your India specific plans

Our target is to become a $1 billion company by 2015 here. In 2010, we witnessed around R560-crore business in the country. Our new manufacturing facility will have a capacity of 2,500 bus units while also expanding its production plant near Bangalore from the current 1,000 units to 2,500 units. Both the plants will produce and sell 5,000 units per year by 2015.

Are you planning any new products for India

Yes. We are present in the premium bus segment in the country. Our next step is to introduce buses in medium segment, but it will not be in the low budget category. It will be just below our premium segment. We are the ones who created the new luxury bus segment in India.

Now, we intend to play a major role in the medium category as well. These buses will be designed at the R&D centre in India. The company will export 20-25% of its products from India in the next five years.

Will India become one of the major manufacturing hubs for Volvo in future

Yes. By 2015, India is likely to be Volvos second largest manufacturing centre next only to China. At present, India is in the fourth position among the companys manufacturing units across the world. We have a plan to make Asia range buses at the manufacturing facility in India.

What kind of hiring plans do you have for India

The company employs close to 9,000 employees across the world, while it has over 1,000 employees in India. We will keep hiring in India for various operations, particularly for production. In the next five years, the company will expand its workforce to 5,000 employees in India.

What kind of government support are you receiving

Compared to five years ago, there is a vast development on the infrastructure front. The government is fairly okay on regulations. Still the government can push infrastructure projects harder. Care for the environment is going to be a big challenge in all mega cities including in India in the future. More and more people are coming to big cities. Bus transport systems will reduce traffic congestion and CO2 emissions in city. The government should encourage bus manufacturers like us to use available technologies. These are the things that should be high on government agenda.

Can you elaborate on your R&D activities

We have a very big R&D centre in Gutenberg in Sweden, two in north America and one each in India, China, Mexico and Canada. For Volvo group, the R&D centre in India is the fastest growing among all R&D centres across the world. The India specific and Asian range of buses will be developed at Indian R&D centre. In 2010, the company witnessed around R15,000-crore turnover through its global sales. Our global R&D spend remained in the range of 3.5% of total sales.