Volvo to bargain with cost-effective methods for cheaper products

To keep options open for manufacturing more critical components in India

Swedish commercial vehicles major Volvo is looking to leverage on the cost effective 'quality manufacturing' of its Indian partner Eicher for its global products to make them more price competitive.

The company, which sources Euro 6 compliant engines from Eicher's Pithampur plant for its global trucks, is keeping options for manufacturing more critical components in India.

"Eicher is exporting Euro 6 engines to Volvo. It has the same quality of manufacturing as Volvo's but at Indian cost...It definitely has helped in competitive pricing of Volvo's products globally," Philippe Divry, Senior Vice President, India Joint Ventures, Volvo Group, told PTI here on the sidelines of Auto Expo.

When asked if the company would consider producing more critical components such as the cabin in India to gain more pricing advantage over global rivals, he said: "The option is open to manufacture more parts."

Divry, however, hastened to add that it is early days yet as Eicher has just started exporting the Euro 6 engines to Volvo and a decision on manufacturing further components in India would be taken only after satisfactory level of compliance over a long period.

Volvo has a 50:50 joint venture with Eicher Motors Ltd -- VE Commercial Vehicles Limited (VECV) -- which has been in operation since July 2008. It includes the complete range of Eicher branded trucks and buses, VE Powertrain and Eicher's components and engineering design services businesses as well as the sales and distribution business of Volvo trucks within India.

Taking a long-term view, VE Commercial Vehicles CEO Vinod Aggarwal said: "We need to first satisfy Volvo with our engine exports. We are adopting their technology, following their process. It is one step at a time before we think of manufacturing other parts."

In July last year, VECV announced start of commercial production of its Pithampur plant in Madhya Pradesh which has an initial capacity of 25,000 units per annum in Phase-I at an investment of Rs 375 crore. It can be hiked to 100,000 units per annum with an additional investment of around Rs 125 crore.

The engine facility has been set up to be a global hub for meeting the medium-duty automotive engine requirements of Volvo Group globally for five- and eight-litre engines.

It supplies Euro 6-compliant diesel engines to Volvo Group plant in Venissieux, France, where these are assembled for the Volvo Group Euro 6 requirements.

The company had said the same platform would be adopted to Euro 3 and 4 engine (BS3/BS4) technologies to meet the VECV requirements and other Volvo Group requirements for this type of engines in Asia.