Volvo Cars India to start local assembly from this year
Earlier this year, it was the first time a Volvo Head had confirmed that they were indeed going to start local assembly in India. Today they revealed official plans.
Volvo is the only mainstream luxury car maker to not have a local assembly plant in India to keep pace with the country’s fast growing market. As of 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. Volvo Cars India has revealed that since the Indian luxury car market is growing rapidly, the company will will start CKD operations from later this year.
Finally after years of speculation, 2017 is the year when Volvo Cars India start local assembly. Volvo had revealed earlier that they need a local partner who understands local conditions and can help the company build a suitable assembly plant.
This local partner is Volvo Group India, 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 will also be assembling their cars. The first Volvo car to be assembled will be the new XC90. They aim to roll out the first made-in-India XC90 by the end of this year.
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.