Volvo’s plans for local assembly plant currently put on hold as the brand eyes viable sales growth
Volvo Auto India Private Ltd. has postponed the plans to set up a production local facility as it seeks to establish a feasible volume base currently in the domestic luxury market. While Volvo India’s MD Tom von Bonsdorff has admitted that it is essential to have an Indian manufacturing factory for localization of parts, his company is biding time before electing to make investment.
The Indian luxury space is currently led by Mercedes-Benz ahead of the other German rivals Audi and BMW. With a slew of product launches mastered last year and plenty more slated for this year, Mercedes’ commitment to India by introducing global products in a flash has indeed paved the way for its success and reaped obvious benefits.
Mercedes registered its highest ever sales in India at the end of December 2015 at 13,502 units while Volvo India could only manage to garner 1,423 new deliveries. The German brand’s main key in becoming the leader of luxury segment is the availability of a local plant in Chakan near Pune which is rated as one of the top-most CKD facilities globally.
If Volvo fancies Mercedes’ market share, it’s imperative to have a local production base. Currently, the Swedish automaker’s existing portfolio is being brought through CBU channel from plants in its home country as well as China and Belgium and sold here. Despite being full imports, Volvo continues to slot its products competitively against the German trios.
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This makes us to imagine that when a fully-fledged Indian assembly plant comes into existence, we could see Volvo substantially pricing its products aggressively. While the focus has been put in place in the construction of new operations in China and North America, this year marks one of the important phases in the development of Volvo in India as several products are waiting in the pipeline.
With the S60 Cross Country sedan already launched early this year, Volvo will be unveiling the XC90 T8 Plug-in Hybrid and the S90 sedan during the course of 2016 with other models like V40 facelift, S60 polestar and XC90 Excellence expected as well.