Volvo Cars looks for Indian partner for local assembly

Volvo Cars is in talks with a clutch of Indian companies including Mahindra & Mahindra, Hindustan Motors and General Motors India to explore the feasibility of utilising the facilities of one of these OEMs to locally assemble its vehicles in India.

Volvo Auto India (VAI) sells the S80 and S60 sedans, XC60 and XC90 SUVs and the V40 Cross Country in India.

A PTI report suggests that eight years after it forayed into India, the company is looking at local manufacture in an attempt to get a 15 percent of India’s luxury car market in about five years' time. The PTI report quotes a  source saying that "they are keen to have local assembly but they have not yet taken a final decision on whether to set up an assembly unit of their own or outsource it to a third party. The project is in initial stages only.”

With local manufacture, Volvo can price its cars more affordably for the Indian market.

Bringing in a luxury car as a CBU attracts a 100 percent import duty hence the push toward localisation. Reportedly, Volvo Cars India sold just over 1,202 units in 2014, in an overall market that is in the region of 30,000 units.

Of the three above-mentioned players, Hindustan Motors perhaps has the most experience in local assembly with its Chennai-based plant assembling the Pajero Sport.

Last week, BMW India announced that it plans to ramp up its localisation efforts in India with over 50 percent of parts of its vehicles produced at the Chennai plant to be sourced from here. The German carmaker has increased its local suppliers to eight from this year from two previously.