Volvo not shipping cars from China facility to India

Volvo does not plan to ship cars from its proposed manufacturing facility in China, for the Indian market.

In August, China's Zhejiang Geely Holding Group acquired Volvo Car Corporation and said a manufacturing facility would be built in Shanghai. Geely added that it would maintain Swedish headquarters and the plants in Sweden and Belgium.

Mr Paul de Voijs, Managing Director, Volvo Auto India, told Business Line that the Chinese facility would be dedicated to meeting local demand and that there were no plans to ship cars to India.

Further, Volvo's Dutch and Swedish factories were equipped to supply 2,000 to 3,000 units annually if needed.

Transport costs

The cost of transporting each unit by sea works out to about $1200 from Antwerp to Kochi, which is far more economical than investing in a manufacturing facility in India now (given the numbers), Mr de Voijs added.

In any case, there were no duty benefits if the car was made in India and sold to Asean countries. While the present import duty in India is 130 per cent, any reduction would be beneficial, he said.

The new factory in China, with an annual capacity of three lakh cars, will come up at Jiading Industrial Zone and produce Volvo's luxury range of C30 and V70 cars. Production is likely to begin in end-2012.

Barely a fortnight ago, Volvo launched its compact luxury SUV, the XC60, in India which will be imported as a completely built unit from its facility in Ghent, Belgium.

The company sells two premium models in India, the luxury SUV XC90 and luxury sedan Volvo S80, whose sales last year totalled 114 units.

Incidentally, the first batch of XC60, comprising 45 units and likely to reach India by end-January, has already been sold.

As for sourcing components from India, Mr de Voijs said it was about $100 million two years ago when Volvo was part of Ford. Nearly 40 suppliers served the combine.