Volvo does not plan to ship cars from its proposed manufacturing facility in China to India, a top local official said.

In August, China's Zhejiang Geely Holding Group acquired Volvo Car Corporation and said a manufacturing facility would be built in Shanghai. Geely added that it would maintain the Swedish headquarters and the plants in Sweden and Belgium.

Paul de Voijs, managing director, Volvo Auto India, told the Hindu Business Line that the Chinese facility would be dedicated to meeting local demand and that there were no plans to ship cars to India.

Volvo's Dutch and Swedish factories were equipped to supply 2,000 to 3,000 units annually if needed.

The cost of transporting each unit by sea works out at about US$1200 from Antwerp to Kochi, which is far more economical than investing in a manufacturing facility in India now (given the numbers), de Voijs added.

In any case, there were no duty benefits if the car was made in India and sold to ASEAN countries. While the present import duty in India is 130%, any reduction would be beneficial, he said.

The new factory in China, with an annual capacity of 300,000 cars, will be built in the Jiading Industrial Zone and produce C30 and V70 models. Production is likely to begin in end-2012.

Volvo has just launched the XC60 in India, importing  it from Ghent, Belgium.

The company also offers the XC90 and S80 in India and sales last year totalled 114 units.

The first XC60 batch of 45 units, likely to reach India by the end of January, has already been sold.

As for sourcing components from India, de Voijs said it was about US$100m two years ago when Volvo was part of Ford. Nearly 40 suppliers served the combine.

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