Swedish luxury carmaker Volvo Cars will start vehicle assembly operations in India this year to cater to the fast-expanding premium car segment in India and position itself for further growth.
The assembly operations, to be located near Bangalore, will focus on models based on Volvo's SPA modular vehicle architecture. The first Volvo model to be assembled there would be the XC90 premium SUV. Volvo said it would announce plans for additional models to be manufactured at the local assembly at a later stage.
Volvo Cars is working with Volvo Group, the truck, bus and construction equipment manufacturer, and will make use of Volvo Group's existing infrastructure and production licences near Bangalore.
The company did not give any further details of the contract or financial details of the operations.
''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. ''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 premium segment in coming years.''
"We are delighted to announce the commencement of an assembly unit,'' said Tom von Bonsdorff, managing director, Volvo Auto India. ''It's a sign of the company's strong commitment to India.''
Volvo's decision to start assembly in India and market its vehicles as 'made in India' fits well with the Modi government's `make in India' initiative that seeks to highlight and promote Indian manufacturing prowess.
While the Indian premium 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. In 2016, Volvo sold over 1,400 cars in India, an increase of 24 per cent compared to 2015. Year-on-year sales growth in the first four months of 2017 amounted to more than 35 per cent.
For the 2016 financial year, Volvo Car Group recorded an operating profit of 11.01 billion Swedish krone ($1.26 billion) against 6.62 billion krones in 2015. Revenue over the period amounted to 180.67 billion krone against 164.04 billion krone in 2015.
For the full year 2016, global sales reached a record 534,332 cars, an increase of 6.2 per cent versus 2015. The record sales and operating profit cleared the way for Volvo Car Group to continue investing in its global transformation plan.
Volvo Cars is owned by Zhejiang Geely Holding (Geely Holding) of China, which acquired it from Ford Motor Co in 2010.
Set up in 1927, the carmaker formed part of the Swedish Volvo Group until 1999, when the company was bought by Ford Motor Company of the US and in 2010, Volvo Cars was acquired by Geely Holding.