Volvo Targeting India’s Luxury Market
Mar. 19 – In a strategic move that underlines the dawning recognition of India’s growing wealth, the auto manufacturer Volvo, owned by Geely of China, is preparing a long term strategy for the Indian market which will concentrate on luxury cars.
In a statement to news agency PTI, Volvo Auto India MD Tomas Ernberg said the market for luxury cars in India has “the potential to grow fantastically”. He further stated that the company’s growth strategy was to focus on high net individuals.
Its sales last year of 812 luxury cars was an impressive 150 percent increase from 2011. The target for next year is 1100 cars, although the company predicts that they will overshoot this goal by some 300 cars.
Volvo plans to introduce the V40 Cross Country SUV to the India market in June this year – a vehicle that retails for the equivalent of approximately US$75,000. However, Volvo does not currently have a production or assembly line in India, and has not yet set a timeframe for doing so.
Yet the intent remains clear.
“We are competing against stronger German rivals who have put up a huge distribution network that’s aided by local plants to roll out cars at lower taxes. But we have to import cars by paying higher taxes. So, it’ll make sense to assemble our cars locally to pass on the benefits to our customers and increase our share in the Indian market,” said Mr. Ernberg.
Although Volvo was the first to enter the Indian market ahead of its European rivals, it initially failed to capitalize on its head start. Last year BMW sold 9,375 cars in the country and Audi, which was the last to enter the market, sold 9,003.
Since being taken over by Chinese automaker Geely in 2010, Volvo has focused on the Asian market, with the Indian luxury market seen by the company as especially promising. The emphasis on luxury appears to make sense, as India is set to develop High Net Worth Individuals (HNI) over the next seven years at a higher rate than any other country in the world, including China.
Volvo has increased its share in the luxury market through sponsoring high-profile events such as the Volvo World Golf Challenge, and Lakme Fashion Week.
“Our foray in golf and fashion stems from our strategy of engaging with the top 5 percent HNI who have the propensity to own a luxury car brand like ours,” said Mr. Ernberg earlier this year.
To date, the company has seven auto showrooms with three more to open (including two in Delhi and one in Bangalore).
Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in Italy and the United States.
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