As GM exits India, Volvo Cars announces it will start manufacturing in Bengaluru

On a day GM India said it would stop selling cars in India and its manufacturing plant in the country would be used to produce cars meant for exports alone, Volvo Cars has announced that it will start vehicle assembly operations in India in 2017. The company believes it will position the company for further growth in the fast-expanding premium car segment in India.

The assembly operations will be located near Bengaluru and focus on models based on Volvo’s SPA modular vehicle architecture. The first Volvo model to be assembled there is the XC90 premium SUV. Additional models slated for local assembly will be announced at a later stage.

In establishing its assembly operations, Volvo Cars is working together with Volvo Group India – the truck, bus, construction equipment and Penta engines manufacturer, and will make use of Volvo Group India’s existing infrastructure and production licenses near Bengaluru. No further contract and financial details will be disclosed, said a statement.

“I am pleased that as of this year we will be able to start selling Volvos that are Made in India,” said Hakan Samuelsson, president and chief executive of Volvo Cars in a statement. “Starting vehicle assembly in India is an important step for Volvo Cars as we aim to grow our sales in this fast-growing market and double our market share in the luxury segment in coming years.”

While the Indian luxury market is still relatively small, it is forecast to grow rapidly in coming years. Volvo currently has a premium segment share of close to 5 per cent and aims to double this by 2020. Volvo Cars in India have had a robust 32% growth in sales volumes in the past 2 years and the 2017 trend is as per its plan to achieve 2000 cars, which will give the company a growth of 25% year-on-year.

“It’s a sign of the company’s strong commitment in India. Backed by a robust sales growth, expanding network and an array of new product launches the local assembly will provide us an impetus to garner a sizeable segment share in the medium to long term. Each locally assembled Volvo Car will have same International standards as anywhere else in the world,” said Tom von Bonsdorff, Managing Director, Volvo Auto 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 government.

Volvo sells 9 models in India that include Volvo S60, Volvo S60 Polestar, S60 Cross Country, V40, V40 Cross Country, XC60, XC90, XC90 Hybird and S90.


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