Volvo Auto India has had a presence in India since 2007. Their products for India include S80, S60, XC60, XC90 and V40 Cross Country. All these cars are sold as CBUs (completely built units).
This is where the problem is, where their growth in India is concerned. Their rivals, Audi, Mercedes Benz, BMW, and Jaguar Land Rover, all have setup plants in India for local assembly. Most of the cars by these manufacturers, on sale in India, are sold as CKD (completely knocked down units).
And as per our laws, CKD units attract a lower import duty as compared to CBUs. India being a price conscious market, Volvo is mainly losing sales to rivals because of price.
Volvo Auto India is targeting 15 percent share in luxury segment in the country over a period of the next five years. This will not be possible without local assembly. As of now, Volvo India local assembly plans are at a preliminary stage. The company is yet to decide on whether to form an alliance with a local manufacturer or set up their own assembly unit in the country for starting local assembly of their cars.
About a year ago, Autocar India had reported that Volvo India will utilize the Volvo Bus plant in Karnataka, to assemble cars. Though this is yet to see light of day, a new PTI report states that Volvo India is in talks with Mahindra & Mahindra, Hindustan Motors and General Motors, to utilize their plants for local assembly.
Of the three, Mahindra declined to comment, HM said its a speculation, while GM India said they are not approached by anyone, and even if they were approached, their answer is no, because they have plans to ramp up exports, and launch new cars in India.
This leaves Mahindra as a strong contender, especially when you consider that Mahindra has seven operational vehicle plants in India currently. Anyways, as it stands for now, it is still not certain as to how Volvo will start local assembly in India. But one thing is for certain, the Swedish luxury car maker has eyes set on the Indian auto industry the long run.
As of today, Volvo Auto India has a strong presence in the country with dealerships in New Delhi, Gurgaon, Ahmedabad, Surat, Mumbai, Chandigarh, Coimbatore, Hyderabad, Chennai, Bangalore, Kochi, Vishakhapatnam and Pune.
via Economic Times