Volvo starts assembly in Bengaluru, aims to double share to 10% by 2020 via new launches

Swedish luxury car maker Volvo has inaugurated an assembly plant in Bengaluru which will initially start with the XC90 before moving to other models using the same platform.

Though local assembly will not mean lower prices of Volvo cars as they are uniform across the world it will allow the Chinese-owned company to expand its product offering in India.

Speaking to Moneycontrol Charles Frump, Managing Director, Volvo India said, “The luxury car market is going to grow big in India. There is a huge opportunity for the luxury car market to grow in India”.

The car maker joined hands with Volvo Group India – the makers of premium trucks and buses – for their infrastructure and production licences.

The Bengaluru plant – one of only two set up by Volvo globally – will import vehicle kits in knocked down forms and assemble them resulting in substantial savings on taxes.

Volvo is amongst the last of the luxury car makers to open an assembly plant in India. Peers such as Mercedes, BMW, Audi and Jaguar Land Rover have been having plants since the past several years in India.

Buoyed by the growing demand, Volvo Cars India is targeting 25 percent rise in volumes this year to more than 2000 units. Last year, the company clocked 1,584 unit sales.

“We are starting operations with the XC90. We are exploring the possibility of bringing other cars from this facility, using the same platform,” added Frump.

It will launch new products in India including the XC60 which had recently showcased internationally. But the blockbuster model is expected to be the XC40, a compact sports utility vehicle rivalling the Audi Q3.

“We are also strengthening our dealership network to support the growth. By 2020 we would be doubling our dealership to 35 from 17 at present. We are looking to double our market share too to 10 percent by 2020 from 5 percent at present,” added Frump.

The company has been actively looking for a local assembly plant since 2012. However, it repeatedly delayed those plans as low domestic volumes did not justify fresh investment. While the plant will assemble models starting with the premium sports utility vehicle XC90, Volvo will still import engines in a fully-built form from Europe.

Volvo has committed itself to offering an electric or a hybrid option with each of the model it will sell from 2019. Between 2019 and 2021, Volvo will launch five fully electric models while ensuring that the rest of its petrol and diesel range has a hybrid engine.

“It is good to see that India is making a bold statement about electrification. Volvo has committed itself to hybrids and EV internationally. Right now we cannot comment on when we would launch EVs in India,” added Frump.