Mumbai: Volvo Auto India Pvt. Ltd, the local arm of the Swedish luxury car maker, plans to launch six new models in India this year as it seeks to increase sales by volume and corner a 10% market share in the luxury car segment by 2020, the company’s top official said in an interview on Friday.
The company is also close to finalizing plans for a local assembly unit. Volvo is the only luxury car maker in India without a local assembly operation. It sells all its models here as imports.
“We can’t expect Indian consumers to know us well if we haven’t invested enough in the market. We need to change that,” said Tom von Bonsdorff, managing director at Volvo Auto India.
Volvo entered the Indian luxury car market in 2008 but its volumes and market share have not shown the kind of growth witnessed by some of the others, like the local arm of German car maker Audi AG for instance, which entered the market around the same time.
Clearly, Volvo’s volumes in India, though they have been growing steadily for the past few years, pale into insignificance when compared with bigger German rivals. It despatched 1,423 units in 2015, up 18.5% from 2014.
The same year, Audi, the second largest luxury car maker in the Indian pecking order, sold 11,192 units. Local arms of Mercedes AG and BMW AG sold 13,252 and 6,812 units, respectively, according to the annual sales numbers released by these companies.
Bonsdorff said in order to accelerate sales in India, the company will now be aggressive with new model launches, establish a deeper connect with buyers and enhance its representation by way of entering newer cities.
“We will be launching six new models in the current calendar year,” he said. This will include facelifts of existing ones such as the new V40 (luxury hatchback) and new S60 (sport sedan), among others. Volvo also plans to bring the hybrid version of the XC90 to India.
Volvo currently has a presence in six Indian cities and plans to enter Raipur, Indore and Lucknow by end of this year. With higher penetration and new models, Volvo hopes to corner a 10% segment share by 2020.
Bonsdorff said in the first two months of the current year, sales of Volvo had grown 30%. It was largely fuelled by models like the XC90—a seven-seater luxury sedan.
“We could have sold more had it not been for the limited allotment,” he said, adding that if the growth seen in the last two months continues, it will build a case for a local assembly plant.
“Its not a question of ‘if’ but ‘when’ as you cannot grow volumes at a fast pace without local assembly,” he said, adding that the company has been “constantly monitoring the position” and might end up having a plant near Bengaluru, where Volvo has its bus plant, even though the synergies between the bus and car plant will be limited.
India levies a duty of more than 110% on fully imported vehicles and 60% on completely knocked down kits (CKD).
An absence of a CKD facility, therefore, puts the firm at a disadvantage when compared with its German rivals. All of them have been stepping up the number of models they assemble locally. It has helped them price the models more competitively.
Bonsdorff said he expects the luxury car market to expand 10% by the turn of the current calendar year.
IHS Automotive, a sales forecasting and market research firm, estimates wider participation of luxury brands in the next five years even though the traditional leaders are expected to maintain their position.
Even as newer entrants like Lexus, Infiniti, and Genesis firm up their India plans, brands like Porsche and Volvo are expected to make further inroads.
Nevertheless, the market will continue to be driven by the German marquees which are expected to further cement their position in the market. The three German brands—Audi, Mercedes and BMW—are expected to control more than 80% of the Indian luxury vehicle market in 2020, said an IHS Automotive forecast released last month.