Volvo is the only brand in the luxury car segment which is at a disadvantage as it doesn’t have CKD operations in India while all others (the trio from Germany and JLR from the UK) locally assembly their volume products.
Swedish luxury car-maker Volvo has been contemplating of establishing a manufacturing unit in India since quite sometime now. However, it seems that they might have to wait a little longer as they are yet to achieve the required sales volumes to justify the additional investment in setting up assembly operations in the sub-continent.
Reflecting on the idea of setting up a manufacturing unit in India, the company highlighted that in Indian market, it is imperative for a car manufacturer to have a production unit, but then, Volvo has to achieve certain base before moving ahead with the scheme of things.
Year 2015 was an important milestone in Volvo’s illustrious global history as it achieved the half a million car sales milestone for the first time. Volvo had sold 1423 cars in India last year. The current market of luxury cars in the country is around 35,000 units per annum.
Volvo uses the CBU (Completely Built Unit) route to sell their cars in India, which despite being CBU are priced competitively to other brands that have their own manufacturing setup in India as Volvo’s central facility in Europe allows them the benefit of economies of scale. More so, when CKD operations happen, the price of the car doesn’t fall drastically as the investment in setting up local assembly is included in the price of the vehicle.
Volvo India Local Assembly
– Volvo has been asked quite frequently about going CKD in India
– The Chinese owned company doesn’t have any plans to do local assembly yet
– Volvo will continue bringing cars via the CBU route
– Lack of volumes to justify CKD operations is the reason for fully importing vehicles