March 18, 2018

Geely's Volvo Cars to start assembly operations in India this year

19 May 2017, 07:50 | Winifred Adams

Swedish carmaker Volvo said on Thursday it will start assembling cars in India this year in a move into a fast-expanding market where it has had only a small presence until now.

The Indian luxury auto market stood at around 34,000 units, down over 5 per cent from about 36,000 in 2015.

"It's a sign of the company's strong commitment in India". In establishing its assembly operations, Volvo Cars is working together with Volvo Group, the truck, bus and construction equipment manufacturer, and will make use of Volvo Group's existing infrastructure and production licenses.

Swedish luxury carmaker Volvo Cars on Thursday said the company would rollout its first India-assembled vehicle by the end of the year. The company is targeting to introduce the first locally built model in the Indian market by the end of this year. While the company is starting with local assembly right now, further localisation will depend on how quickly it adds on the local sales numbers. The first Volvo model to be assembled there is the XC90 premium SUV.

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Volvo's announcement came as General Motors said it will stop selling cars in India, where it has less than a 1 percent share of passenger auto sales.

Though the Indian luxury market is small, it is forecast to grow rapidly in coming years to garner 10 per cent premium segment market share by 2020 from 5 per cent now.

Also, this is the second facility for Volvo Cars globally, after one in Malaysia, where knocked down vehicles are assembled. "Volvo Cars in India had a 32% growth in sales volumes in the past two years and the 2017 trend is as per our plan to achieve 2000 cars, this will give us a growth of 25% y-o-y", Bonsdorff added. "It's an arms length partnership in the Bengaluru plant", said Samuelsson.

GM's exports from India, mainly to Mexico and Latin America, almost doubled to 70,969 vehicles in the fiscal year than ended on March 31. "This is a good way to reduce our risk level in the country, as we are in line with Make in India", von Bonsdorff said. The contract manufacturing keeps investments in the assembly operations low and allows the company to be more aggressive in terms of margins and profitability in the Indian market.

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