Volvo to make India global hub of its Asia range

Expects revenues for India subsidiary to shoot up to $1 bn from the present $200 mn.

India is set to emerge as the global development and manufacturing hub for Swedish bus maker Volvo Bus Corporation’s Asia range over the next four years.

The company, which has production facilities in 20 countries, has global manufacturing bases in Poland, Mexico and China. While the facility in Poland supplies premium buses to Europe, the centres in Mexico and China roll out premium products for countries in the Americas and southeast Asia respectively.

“India will be the fourth global hub for Volvo. The Asia range of buses will be designed, developed, manufactured and exported exclusively from India to the rest of the world. The new 9100 model is the first in this range of products,” said Akash Passey, Managing Director and Chief Executive Officer, Volvo Buses (South Asia). The Volvo 9100 coach is a medium haulage bus designed to operate over 300-400 km. The Indian unit expects at least 40-50 per cent of overall sales to come in from the Asia product range over the next two years.

Highlighting the growing importance of India in Volvo’s global operations, Hakan Karlsson, president, Volvo Bus Corporation, said, “We have a clearly defined role for India in the future. With a planned investment of at least Rs 400 crore, India would emerge as the second largest market for us globally over the next four years. It would be the manufacturing hub for selected models and have a research and product team focused on developing specific products for Asian markets, which would then find their way to the rest of the world.”

The company, looking to sell 25,000-30,000 units worldwide by 2015, expects nearly half the volumes to come from the emerging markets of India and China. The Indian unit is projected to increase sales fivefold to 5,000 units per annum to become the second largest market for Volvo Buses worldwide over four years. India is now the sixth largest market for the company, behind China, South America and Europe.

Revenues for the India subsidiary, too, are expected to shoot up to $1 billion from the present $200 million. As much as 25 per cent of overall volumes would be registered as exports from India to countries in Asia-Pacific, West Asia and South America.

To build scale, the company is expanding its product range to offer 10 variants across both inter-city and city segments in 2012. Volvo Buses India has the capacity to manufacture 1,200-1,500 units per annum at its facility in Hoskote, Bangalore. The company is considering options to expand capacity at the existing facility and to set up a second manufacturing unit in the country.

While a final call on the site for the second unit has not been taken yet, Karlsson says investments over the Rs 400 crore (already planned) will be made for the new plant. Volvo Buses India has a market share of 70 per cent in the luxury inter-city coach segment and over 50 per cent share in the low-floor air-conditioned city bus segment.