Volvo to assemble its cars in India

Swedish carmaker Volvo announced its plans to start vehicle assembly operations in India this year that will bring down the tax component substantially and enable the company to take on dominant German luxury carmakers.

Volvo is the smallest player in the luxury car segment. Mercedes-Benz leads the pack in India and globally too, while Audi has lost the second slot to BMW this year. Tata Motors-owned Jaguar & Land Rover is ahead of Volvo that has sold around 1,500 cars in 2016.

Volvo's assembly operations will be located near Bengaluru and will focus on models based on Volvo's SPA modular vehicle architecture. The first Volvo model to be assembled here is the XC90 SUV. Additional models slated for local assembly will be announced at a later stage. The company has been importing all its cars sold in India, thus inviting taxes up to 160-170 per cent on every unit.
 
Volvo Cars is working with Volvo Group India - the truck, bus, construction equipment and Penta engine manufacturer - for establishing its assembly operations. It will make use of Volvo Group India's existing infrastructure and production licences. However, the company did not share any financial details.
 
Commenting on the development, Håkan Samuelsson, President and Chief Executive of Volvo Cars, said, "Starting vehicle assembly in India is an important step for Volvo Cars as we aim to grow our sales in this fast-growing market and double our market share in the luxury segment in the coming years."
 
Tom von Bonsdorff, Managing Director of Volvo Auto India, said, "It's a sign of the company's strong commitment in India. Backed by a robust sales growth, expanding network and an array of new product launches, local assembly will provide us an impetus to garner a sizeable share in India's luxury segment in the long term."
 
While the Indian luxury market is still relatively small, it is estimated to grow rapidly in the coming years. Volvo currently has a premium segment share of close to 5 per cent and aims to double this by 2020. In India Volvo Cars has seen a robust 32 per cent growth in sales volumes over the past two years.

Volvo's decision to start assembly operations in India and market its vehicles as 'Made in India' fits well with a similar initiative launched by the national government several years ago, which sought to highlight and promote India's manufacturing prowess.