Volvo to increase sourcing from India by 40 pc

Swedish commercial vehicle maker Volvo plans to increase the sourcing of components from India by 40 per cent this year. The company sourced components worth 70 million from India in the last calendar year. According to Mr Eric Leblanc, Managing Director, Volvo India, the company was considering several new components that the company could start sourcing from India in the current year.

Mr Leblanc was speaking at a press conference announcing the launch of two new Volvo truck models FH and FM.

Mr Leblanc added that with increased economic activity in India, he expected the company to grow at the same pace as the overall commercial vehicles market, which is approximately 30 per cent. Volvo had sold 600 trucks and 400 buses in 2005. The company's existing unit is located at Hosur in Tamil Nadu and has a capacity of 1,200 units per annum on a single shift basis.

Mr Leblanc said that the company, which had invested about Rs 200 crore till now, was unlikely to bring in fresh investments in the near future as it had sufficient capacity. He, however, declined to comment when asked whether the company was looking to expand inorganically in India by picking up stakes in existing players.

Volvo currently only operates in the heavy-duty trucks segment (of 16 tonnes and above), which has a market of about 150,000 units per annum in India. The segment is likely to see more competition over the next few years with more local and international players entering this domain. Mr Leblanc however said that the company's products would continue to be priced at a premium as compared to local competition. Volvo's trucks currently have a localisation content of 30 per cent, which the company said would go up if it garners sizeable volumes in India.

Taken from Business Line

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