Volvo Cars is eyeing sales of more than 1,000 units in India this year and it expects the number to grow twentyfold by 2020, riding on the growth in the luxury segment. Though the Swedish car maker, now owned by China’s Zhejiang Geely Holding Group, is way behind its German rivals in sales volumes, it managed to take the second position in Hyderabad last year in terms of cars sold. Tomas Ernberg, managing director, Volvo Auto India, tells FE’s Ajay Sukumaran that the company hopes to replicate the success in other tier-two cities, while leveraging the Volvo brand name in India.

You aim to sell 20,000 cars by the end of the decade. What’s the road map for this?

If you go back five years, the luxury car market was 2,000-3,000 units. That has grown tenfold to around 30,000 vehicles. The luxury segment in India is today very small, about 1% penetration of the total car market. That will go to 3% in 5-6 years, which means 1,50,000 units. So there is a growth already in the luxury market. We, at the end of 2011, had 1% of this segment. Last year, we ended up with a little bit less than 3% and this year we are aiming to be around 4.5%. The main aim is to gain up to 15%. The expansion of the network will be one key to growth, the other would be introduction of new models. We are bringing a new car, the V40 Cross Country, this year. That would be our fifth model.

Which are the cities from where most of your sales comes from?

In 2012, we chose Hyderabad to be our success market. Even though Hyderabad is a very small market, that was the biggest for Volvo cars. We sold 315 units there and that was more than what we sold in Delhi or Mumbai. We were very active with different events, sponsorships, advertising and we tried to do as much as possible to reach out to the high net worth individuals, and it worked. We could not do that in Delhi for example because of the cost difference. In the bigger markets, you would have a lot more competition as well. The strategy was to go to a tier-two city where we can actually see the performance. We got 21% share in Hyderabad. We are saying that we want 15% pan India by 2020, so it is possible. We have the products, we are very competitive and we offer the safest cars. What we lacked was network presence, the amount of money we spent pan India and also the image. To buy a BMW is seen as higher status than to buy a Volvo. That we cannot change overnight but that will change very soon. Actually it has worked well in Hyderabad. Volvo is considered as a serious luxury car in Hyderabad. This kind of attitude needs to reach all over India.

Can you replicate it in other cities and which cities are you focusing on?

We will continue to focus on Hyderabad plus we will choose one more market this year. That could be Bangalore, but it is still not decided. Delhi, Mumbai will come later on, we are not ready to take on those big markets. We are still investing in the National Capital Region and Mumbai. Around 14,000 cars come from these two cities, so we must invest in these two cities.

Though you are different companies, how will you leverage the Volvo buses brand?

We have one connection, that is the Volvo logo. And we do the Volvo Ocean Race together, which is a 50:50 partnership. We also do the Volvo World Golf Challenge. Those are the affiliations we have, but legally the entities are totally separate. We share the same name. But we can leverage on that. Volvo buses have done a fantastic job and they are known for quality.

How will India compare to your biggest markets by 2020?

India is recognised as one of the high potential growth markets and together with our headquarters we embarked on a strategic growth plan to secure volumes, market share and profitability. Our plan to sell 20,000 cars by 2020 could get us to be the top 10 markets for Volvo cars, globally.