Volvo Gears Up for Local Car Production in India

Volvo Car Corp. plans to begin local assembly of its XC90 luxury crossover vehicle in India through its Volvo Cars India unit by the end of this year.

The company is adding an assembly line for the XC90 (pictured) at its Hoskote plant outside Bengaluru. The facility currently makes commercial trucks, buses, construction equipment and Penta engines.

The new line will accommodate Volvo’s “SPA” modular vehicle architecture. The company says the plant eventually will add the V90 Cross Country wagon and next-generation XC60 small crossover.

Local assembly will avoid India’s 120% tax on imported cars and replace it with a 60% tariff on completely knocked-down kits. The Swedish carmaker has been shipping cars to India since 2010. But those vehicles suffer a cost penalty compared with locally made models from rivals Audi, BMW and Mercedes-Benz.

India’s luxury-car market shrank 4% to 33,300 units in 2016. Volvo, whose passenger vehicle sales in the country have grown from 1,200 units in 2014 to 1,600 cars last year, targets 2,000 deliveries this year. The company hopes to grow by at least 30% annually over the next several years.