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Volvo Cars on Thursday announced its decision to start vehicle assembly operations in India in 2017. The announcement came on a day General Motors shocked the industry with its decision to pull out of the domestic market in India and South Africa by the end of the year, choosing to produce there only for exports.
With close to five percent current share of the premium segment of the market in India, which it hopes to double by 2020, Volvo’s decision to assemble in that country positions the company for further growth in the fast-expanding premium car segment in India.
The assembly operations, according to Volvo, will be located near Bangalore in southern India and focus on models based on Volvo’s SPA modular vehicle architecture. The first Volvo model that will be assembled at the new facility will be the XC90 SUV. Additional models earmarked for local assembly will be announced at a later stage.
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 near Bangalore. No further contract and financial details will be disclosed.
“I am pleased that as of this year, we will be able to start selling Volvos that are made in India,” says Håkan Samuelsson, president and chief executive of Volvo Cars. “Starting vehicle assembly in India is an important step for Volvo Cars as we aim to increase our sales in this fast-growing market and double our market share in the premium segment in coming years.”
“We are delighted to announce the commencement of an assembly unit,” says Tom von Bonsdorff, Managing Director, Volvo Auto India. “It’s a sign of the company’s strong commitment to India.”
Volvo’s decision to start assembly in India and market its vehicles as ‘Made in India’ fits well with a similarly named initiative launched by the national government several years ago, which seeks to highlight and promote Indian manufacturing prowess.
Though the Indian premium market is still relatively small, it is forecast to grow rapidly in the coming years. In 2016, Volvo sold over 1, 400 cars in India, an increase of 24 percent compared to 2015, with year-on-year sales growth in the first four months of 2017 amounting to more than 35 percent.
