Volvo’s India Plan - More Locally Assembled Cars, New Car Launches, And Network Expansion

Assembly of its luxury cars is on top of Volvo’s agenda for the Indian market. In October 2017, the Swedish carmaker started local assembly of its flagship XC90 SUV at its plant in Bengaluru which already produces trucks, buses, construction equipment and Penta engines. The company now plans to add another vehicle to the assembly line early next year.

Volvo’s immediate plan - assemble another car in India and launch XC40 in mid-2018

The confirmation (of Volvo’s plan to assemble another car in India early next year) comes from Volvo Auto India’s managing director, Charles Frump. He told us, “It was a huge step for us to set up our Bangalore assembly facility. Right now that’s focused on XC90. Now that we have established that that’s going well, (now we want to see) how can we expand that to some of the other SPA vehicles. That’s very high in my agenda to make sure that we look at expanding beyond the XC90 in our Bangalore facility.” He further added, “We have to look at the entire business case, and what [car] makes more sense to localise. That’s (local assembly) certainly a part of the equation. We’re looking to hopefully make some announcements early next year.”

The locally-assembled Volvo XC90 SUV is based on the SPA platform which it shares with the S90, V90 Cross Country, and the newly-launched XC60. So, local assembly of either of the three cars mentioned above alongside the XC90 could be on the cards. Volvo Auto India told us that the XC90 forms 23 per cent to 25 per cent of the company’s sales in India while the older XC60 contributed about 30 per cent before. The company also said that they have received good response to the S90 sedan. While it makes a lot of sense for Volvo to assemble the XC60 SUV alongside the XC90 in India, since both these cars make up for over 50 per cent of its sales, it remains to be seen which will be the next car to roll out from Volvo’s Bengaluru plant. Other than this, Volvo has already confirmed that the XC40 will hit the Indian market in mid-2018.

The next step - more locally assembled cars, new launches, and doubling the dealer network to attain 10 per cent market share

Clearly, there will be at least two locally assembled Volvo models in 2018 - the XC90 and another car that Volvo will announce early next year. But the company doesn’t want to stop at that. In the next couple of years, Volvo will assemble more models in India than what it imports as CBUs (complete built-up units). “We’re going to have more localisation than CBU. From Volvo-mix perspective, you’ll see more local assembly cars than we do CBUs, certainly in terms of volumes and our number of cars”, said Frump while talking about Volvo’s future plans for the Indian market.

Volvo also plans to phase out the current S60 and the V40 (including Cross Country) from India by 2019. In clear words, Frump told us, “The XC90 will be our oldest car in 2019”. There will be new products coming in, but Volvo Auto India remained tight-lipped about the upcoming models and their expected market launch. However, there was a hint.

Next-gen S60 and V60 coming after XC40?

While talking to us about phasing out the S60 and V40 models, Frump said, “We have the legacy platforms for S60 and V40… Over time, we’re going to have a very regular cadence of market launches, maybe not in the new segments. We have a lot of focus on the S90. We have gotten rave reviews on it and sales are strong. Further, global cadence-wise, we’ve rolled out the 90s (90 series), the XC60 is the first of the SPA vehicles on the 60s (60 series) platform, and you can expect more to come from Volvo on S60, V60 perspective.”

But in order to grab a 10 per cent pie of the Indian luxury car market, which is currently around 37,000 new car sales per annum, Volvo is planning a dealership expansion as well. The company currently has 16 retail outlets and it plans to have 30 in the next couple of years.

The big question - Volvo (global) says all their models post 2019 will be electrified. Does it hold true for India-made Volvo cars as well?

Frump said, “That I don’t know the answer to yet... but we’re now very much committed to assembling here in India and... it wouldn’t make a lot of sense if we didn’t make that capability. So, certainly I’m not ready to announce that we’re going to do it, but I guess that certainly should be our attention.”

Although it wasn’t a clear answer, if we read between the lines, it’s clear that Volvo will eventually electrify the India-assembled cars as well. The Swedish carmaker currently has a 5 per cent luxury car market share in India and going by their upcoming products, competitive pricing, and future plans, it does seem to be on track to achieve 10 per cent luxury car market share by 2020.

Source: cardekho.com