Swedish truck, bus and earth moving equipment maker Volvo AB on Tuesday announced its plans to invest Rs 3,800 crore in India over the next few years.
Of this, Rs 1,800 crore will be invested in its joint venture with Eicher Motors Ltd, Volvo Chief Executive Officer Olof Persson told reporters here in Bangalore on Thursday. The rest of the investment will go into the company's own operations, he added. Volvo has strong operations in the bus segment in India supplying it low-floor buses to various State government transport department and private service carriers.
Volvo, the world's number two truck maker by revenues and India's third largest truck maker, and Eicher Motors hold a 50:50 stake in the joint venture, VE Commercial Vehicles Ltd. The joint venture sells the Volvo-branded trucks and Eicher-badged trucks and buses.
"With the investments we are making and the plans we have for India, we expect growth rates here to be higher than many other markets," he said while briefing reporters on the company's plans.
Volvo's investment plans come at a time when the company is experiencing a slackening of demand across Europe due to the economic morass the region is in now. North America too has been seeing a softening of demand as dealers have cut on stocks and customers are tentative in their investment.
Meanwhile, Volvo AB also aims to eventually export about 30% of the capacity at its Indian engine plant it plans to open next year as it looks to leverage on cost from India operations.
"In the long-term, the capacity of the engine factory will be 100,000 engines," Persson said.
Volvo joins a list of global automakers wanting to use India as a manufacturing centre for parts and components to cut costs and also as an export hub to markets around the world.
Persson also said that the automaker will work with Eicher to speed up the localisation of parts in the engines produced at the plant in Pithampur in Madhya Pradesh.
Volvo makes trucks under the Renault, Mack, UD Trucks and Eicher brands as well as its own name. Volvo is one of global majors, including rivals Daimler AG and Scania AB, racing to grab a slice of India's truck and bus market that had been dominated by Tata Motors Ltd and Ashok Leyland Ltd for many years now. "We are also readying a product line to tap the value segment, a space in which we are not yet present," Persson added.