Volvo announces local assembly for India; XC90 to be first model

The India-assembled vehicle, to begin with, will be the XC90 though Volvo does not rule out adding more models later.

Volvo Cars' assembly unit will be located near Bengaluru, Karnataka and focus on models based on Volvo's SPA modular vehicle architecture. 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. The company has been importing all its cars sold in India, thus inviting taxes up to 160-170 per cent on every unit.

Premium vehicle manufacturer Volvo Cars has announced plans to start vehicle assembly operations in India in 2017.

The Indian luxury auto market stood at around 34,000 units, down over 5 per cent from about 36,000 in 2015.

Swedish luxury auto maker Volvo Cars will start local assembly of its vehicles in India under strategic alliance with former group entity Volvo Group India which makes trucks and buses from its plant in Bengaluru.

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Volvo sold over 1,400 cars in India in 2016, an increase of 24 percent compared to 2015.

Volvo now has a market share of close to 5 per cent in the luxury segment in India, thanks to the 32 per cent sales growth in the past two years. But Volvo is unlikely to cut prices of models even after the local assembly, said Bonsdorf. The car-maker has witnessed a robust 32 percent growth in sales volumes in the past two years, and aims for the same in 2017. No further contract and financial details have been disclosed. "That's why we are entering India with local assembly", Volvo Cars President and CEO Hakan Samuelsson told a group of visiting Indian reporters here.

The decision to start assembling models in India comes after an initiative of the Indian government which wants to promote the local manufacturing expertise, with Volvo to market its models as "Made In India".

Volvo now sells nine luxury models in India, including sports sedan Volvo S60, performance sedan Volvo S60 Polestar, premium sedan Volvo S60 Cross Country and luxury hatchback Volvo V40.

Volvo Cars, which is putting up a factory in China for electric cars, is looking India as one of the future potential markets.

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