Volvo looking for Indian partner to setup CKD assembly plant

Volvo is reportedly looking for an Indian partner to set up a CKD assembly plant in the country. The company has been trying to establish local assembly of its cars for a fairly long time. However, no significant progress has been made in this department yet.

Volvo is currently the only mainstream luxury car company in the country which is bringing all its models as CBUs (Completely Built-up Units). This is resulting in the Volvo range having a price disadvantage compared to its immediate competitors that are being assembled locally. Import duties applicable on Volvo cars imported in India is currently in the range of 100-180%. Since the Indian luxury car market is growing with every passing year, Volvo is now stressing on setting up a plant for the local assembly of its cars.

According to media reports, the Swedish automaker is currently scouting for an Indian partner who can help the company to set up a CKD assembly plant. Volvo officials in India are also trying to gauge the magnitude of investment needed and the potential profitability from local assembly.

In India, Volvo cars compete against rivals from the three German brands - Audi, BMW and Mercedes-Benz. In order to compensate for the higher import duties applicable, Volvo is cutting down its margins, thus limiting the Indian arm's profits. With local assembly, the company is expected to be able to offer its cars at a more aggressive price point and at the same time, sustain respectable profit margins.

Source: Economic Times