March 15, 2011: Goran Larsson
Goran Larsson speaks on India's singificance to his company's plans
You have launched the S60 at a very attractive price, a CBU which undercuts most of its CKD rivals. How is this possible?
That’s our decision to make a statement in India and get the right attention level for the new product. It is one way of marketing our product and making people aware. It’s truly packed equipment and, spec-wise, well equipped and well priced. We believe it will bring the Volvo brand forward.
Does this mean you get a healthy margin selling the S60 in India?
We make money on the S60 but we would like to make more. We are exposed to currency fluctuations in our home market that does hurt us today with the rupee. But we are not taking that into consideration for the launch.
Are you looking at options to bypass this, like sourcing the S60 from countries like Malaysia where you have a CKD assembly?
We have that option if it makes business sense from a profitability, logistics or shipping point of view but today we can supply India from the two factories in Europe.
Volvo has been in India for quite some time but it really hasn’t got the traction it expected to?
We have a slow approach. We have established a dealer network, we have seven dealers and we started with two car lines. We realised that to go farther we need to expand our portfolio and also dealer network. So we are taking the steps now by doubling the car line with two new cars — the XC60 and S60, we are expanding the dealer network in 2011-2012 but we have to do with good quality and satisfied customers. We just don’t want to create volume and a database of customers who are unhappy. We want to have happy customers because they are our best ambassadoArs to help us build the brand in India.
Given the luxury car market’s growth in India, do you see Volvo graduating to CKD operations?
We are not looking at CKD. We are looking to establish the brand, launch new cars and expand dealer network. We are doing the basics and CKD is an industrial complex matter and not our game for the time being.
Within a span of four months, you have launched the S60 and XC60 in India. What kind of volumes are you looking at?
I don’t talk volume. I talk quality and systematic growth which brings perception on the Volvo brand. One must learn to walk straight before we run.
Recently Volvo made a global announcement that it will invest US$ 11 billion over the next five years or so. How much of it will be in Asia?
To be honest, I don’t have that split. Of course, a lot of it will be in China. Asia is the fastest growing region and it’s a very interesting business for us, so I believe that the Asian cluster will be the largest region among the overseas markets this year and also on the road up to 2015-16.
How has the transition from Ford to Geely been?
When Ford bought us, I took a cup of coffee and a cookie and talked for half an hour and then started working again. It’s the same when Geely bought us. It’s still very clear from our new owner that Volvo is Volvo and Geely is Geely and we have our Volvo strategy and Geely has its own strategy. They do their own thing and we do our own thing.
What opportunities and challenges does Volvo see in India?
The opportunity is definitely the volume and the size of business which is going to be generated in the next decade. The challenges are as usual — an extremely competitive environment, everybody is here, and everybody wants to get in here, we have to be competitive enough to take our market share. Of course, that is dependent on the infrastructure, taxation, and disposable income, all of which are out of our control.
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