Swedish car maker Volvo, now owned by Chinese automaker Geely, is gung-ho on the Indian car market. Although Volvo entered India over half a decade ago, in 2006 to be precise, the Swedish luxury car maker has been operating through the completely built unit (CBU) route, and with a limited number of dealerships. It may be noted that Audi BMW and Jaguar-Land Rover entered India after Volvo, yet have a larger footprint and greater sales than the Swedish car maker.
Taking the CBU route meant that Volvo has been playing second fiddle to the Teuton trio of Audi, BMW and Mercedes Benz, and even for that matter, Jaguar and Land Rover, what with all of the latter having dedicated assembly units in India. By joining the luxury car mainstream through the CKD kit route, Volvo stands to grow sales volumes substantially.
In the latest news emerging about Volvo, the car maker has confirmed plans of establishing a CKD (Completely Knocked Down) kit assembly facility in India. The CKD car making facility is said to come up close to Volvo’s bus and truck manufacturing unit at Narsapura, off Bangalore.
Locating its car making facility at Narsapura is expected to give Volvo the advantage of the Ennore port, situated off Chennai. Narsapura is about 325 kilometers away from the Ennore port, from where Volvo currently imports its luxury cars through the completely built unit (CBU) route.
CKD assembly will allow Volvo to save on the steep import duties levied on CBU automobile imports by the Indian government. The lower import duties will lead to more affordable Volvo luxury cars, and in turn higher sales numbers.
Volvo finished last year with sales of 936 cars in India and the car maker has ambitious plans to grow this number more than ten fold, to 10,000 units a year by 2018. The ten fold increase in sales will require more than just CKD assembly. Volvo will also have to expand its dealership and after sales reach to a level comparable to that of the Teuton trio.