Volvo India, a 100% subsidiary of Volvo Group, will increase output by 66% during 2008 after making 1,500 vehicles (1,200 trucks and 300 buses) in 2007.

According to Business Standard online, Volvo India has a manufacturing unit at Hoskote near Bangalore and is growing to meet the requirements for trucks and buses in both domestic and export markets.

Eric Leblanc, managing director, Volvo India told Business Standard: "We will be ramping up our production next year. That will not require any additional investment, but we will add few more workers to take up two shifts a day. The new capacity being added will be used to meet export commitments next year. We are looking at exporting 1,000 trucks in 2008."

The report said Volvo sold 650 trucks and 300 buses in India last year, and is aiming for 15% growth this year. Growth there is being driven by the surge in demand from the infrastructure sector, coal mining and general cargo and logistics sectors, Leblanc told reporters.

The company, which exported 120 trucks to Korea in 2006, plans to export 300 units in 2007 to countries like Myanmar, China, Indonesia and Vietnam, Business Standard said. "We are looking at lower freight cost and delivery time for exporting to China. Costwise, it is advantageous to supply completely built units from India to China [rather] than exporting from Sweden to China. We will import CKD kits from Sweden, and assemble them at our Bangalore plant to be exported to China," Leblanc said.

The Business Standard noted that Volvo India has set up a joint venture with Jaico Automobiles of the Azad Group to manufacture bus bodies at Bangalore, and holds a 70% stake in this JV. It is building a plant to produce 1,000 buses at Hoskote adjacent to its truck making facility and will commence production by December 2007, Leblanc said. The company will export 50% of production to West Asian and South East Asian nations.

Volvo will make both city buses and inter-city buses at this plant, Business Standard said.

According to the report, the company will also increase sourcing of automotive components like forgings and castings from India which will be shipped mainly to Volvo's plants in France, Sweden, Belgium and the US.

"We are trying to increase the [supply] of components from engine suppliers to other Volvo truck plants around the world. So far we have with Indian suppliers an order book of EUR75m and we expect to increase that to about EUR90m this year. We have a project to source more components in general from emerging markets like India, so that we will have further impact in the years to come," Leblanc told Business Standard.

The publication added that Volvo India had since said it is in talks with China's Dong Feng over a joint venture project to serve Asian markets.

"We are currently in talks with them, and are looking towards picking up a 50% share in the joint venture. Right now, everything is only in the discussions stage," Eric Leblanc, managing director, Volvo India told Business Standard.

The interest in a joint venture with a Chinese company is aimed at consolidating Volvo's position in the Asian markets and to serve the two largest markets in this part, China and India, he reportedly said.