Volvo is the only mainstream luxury car maker to not have a local assembly plant in India. Until now, the Geely-owned Swedish brand is importing its products as Completely Built Units (CBU) and hence incurring heavy import duties of around 100-180%.
But not any more. To keep pace with the country’s fast growing market, Volvo Cars India has started CKD operations from today. They have rolled off their first ever made-in-India car, and it is their flagship SUV – XC90.
Volvo Cars India have partnered with Volvo Group India to setup this local assembly. Volvo Group India is a separate entity from Volvo Cars India. Volvo Group India has been manufacturing Volvo branded buses and trucks for quite a few years now from their plant in Hoskote near Bangalore. It is from this plant that Volvo Cars India are also assembling their XC90.
After the XC90, it is the XC60 which will enter production at company plant in India. Post that, the V90 is expected to be produced from Indian plant. Volvo Cars will only be assembling those cars which are built on the SPA (Scalable Product Architecture), for now.
Globally, Volvo is just as big as Toyota’s Lexus or Tata’s JLR brand – but in India, the Swedish brand only has a market share of 5% in the luxury car space. As of now, Volvo India prices its products very aggressively despite the high border taxes and this has an adverse impact on the subsidiary’s profitability. With a local CKD plant, the firm is hoping to protect its future profit margin and sustainability.
It is not clear as to by what percentage the price of XC90 will be reduced once the locally assembled units are on sale. But one thing is for sure, this is the start of a new beginning for Volvo Cars in India.