Volvo plans to be among the top three players in the luxury car segment by the end of the decade. However the company has no plans to set up an assembly plant in India anytime soon. The Swedish automaker will continue to bring vehicles through the CBU route, while its key German rivals opt for cheaper CKD operations. The excise duty on imported cars have been increased recently, which has made them pricier. However that is not enough to motivate Volvo to go the CKD route, even though high-end cars like the BMW 7-Series and Mercedes S-Class are being locally assembled via the CKD and SKD route respectively.
So why does Volvo not plan to go the CKD route, after all the savings in excise duty is quite significant. At yesterdays’s V40 Cross Country launch, we caught up with Tomas Ernberg, Managing Director of Volvo Cars India who told us that the prices of their cars will remain the same in India irrespective of them being CKD or CBU, thereby making little sense to opt for locally assembly. The reason being the investment in setting up a plant will have to be recovered through higher pricing of CKD models. Thus there are no plans to set up a local assembly plant in India, even though the media sphere is abuzz about such speculations.
Volvo plans to sell 120 units of the V40 Cross Country in India this year. The company has already received 70 bookings and will import only 120 units for 2013. The Chinese owned company is not looking for volumes in India and is well aware about the lack of financial muscle against it’s competitors. Volvo plans to expand its showrooms in India and their next dealership will be opened at Vizag later this year. There are no immediate plans to launch the V40 hatchback in India and the V40 Cross Country competes majorly with the Mercedes B-Class and BMW X1. Volvo plans to sell 1200 units in India this year.
