Volvo is seeking a partner to build entry-level trucks in India and may also locate its Asian engine plant in the country, according to a local report.
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AB Volvo’s executive vice-president and deputy chief executive officer Jorma Halonen told India’s Hindu Business Line it plans to set up a manufacturing plant in India to address the volume market.
“If we have to be a volume player in India, we need to tie up with a company that can get us numbers as quickly as possible,” he was quoted as saying.
Halonen said Volvo could either set up a joint venture or have a technical arrangement with a company for the new plant. Volvo had earlier indicated that it is also looking at setting up a construction equipment plant in India.
Hindu Business Line said Volvo India produces about 1,000 units of trucks 16 tonnes and above a year while the total market size in the country is about 200,000 units.
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By GlobalDataHalonen was quoted as saying Volvo is talking with a few companies in India to set up this new venture and there is a good possibility that the new plant could be located near Bangalore where Volvo India already has a truck production plant.
He said the current local content level of trucks made in India is around 20% compared with 70% for trucks made in Brazil. “We want it to be about the same level as in Brazil to become more cost effective,” he added.
According to Hindu Businesss Line, Halonen also said that India is also under consideration for an engine and transmission plant for the Asian market.
Volvo last February announced that it was planning to set up an engine and transmission plant in Asia – it currently produces about 300,000 engines of various types globally.
The revenue share from Asia, which is currently about 8%, could rise to 18% because of the huge market potential which exists in the continent, the report said.
Halonen was quoted as saying there was a possibility that products from the recently acquired Nissan Diesel could be assembled in India.
He said Volvo would continue to study those countries which provide low cost, high volume business for setting up plants.
Wages in India are one-third of those in Europe and the Americas, and it therefore continues to be an attractive destination for AB Volvo, Halonen told Hindu Business Line.
