Local assembly on hold for Volvo India

Swedish carmaker Volvo’s plans of setting-up a manufacturing unit in India have been put on hold for now until it achieves the requisite volumes to substantiate the additional investment.

“As of now, there is no decision to set-up a plant in India,” Tom von Bonsdorff, managing director, Volvo Auto India told Autocar India. “In a price-sensitive market like India, it is imperative for any car manufacturer to have a production unit. However, we must achieve a certain base to begin localisation for our investment to turn viable.”

Volvo India registered sales of 1,423 units in calendar year 2015. The luxury segment in India is around 35,000 units per annum. German carmaker Mercedes-Benz is currently India’s top-selling luxury carmaker as it registered its highest sales ever in India at 13,502 units in year ending December 2015.

The company, which sells its cars as CBUs in the country at present, has its main car production plants in Sweden, Belgium and China and it has begun construction of a plant in South America. Despite selling cars in India as full imports, most of the carmaker’s vehicles continue to be priced competitively even as they go up against cars from rivals such as Mercedes, Audi and BMW, all of whom have local-assembly units with a majority of their vehicles being assembled here.

“Our central facility in Europe gives us the opportunity to work on economies of scale, ensuring that our vehicles continue to be priced comparatively in other markets,” Bonsdorff said, adding that the company is currently in the process of setting-up industrial operations in China and North America, and needs to focus on that.

The company recently showcased two concept cars previewing its range of compact 40 Series models as a part of its global small-car strategy.  The concepts are based on Volvo’s new Compact Modular Architecture (CMA) platform, which has been designed to accommodate not just internal combustion engines, but also plug-in hybrid and fully electric powertrains. Vehicles based on the CMA platform will be manufactured at the company’s plant in Ghent, Belgium.

Volvo is now gearing up to launch the XC90 T8 Plug-in Hybrid and the S90 sedan in India. At present, the company has 16 dealers across India with plans to expand in the current year.