Volvo Sets Out on Feasibility Study for Indian Manufacturing Firm

One of Ford Motor Company’s premier units Volvo Car Corp. has embarked on a research that aims to obtain sufficient information that would determine the viability of establishing a manufacturing firm in the Republic of India. This plan sprung out as the company sets up to sell its first entirely imported vehicles to the Indian market.

The sale of the imported Volvo vehicles, which are completely assembled in Sweden, will start next week. The automotive company will be concentrating on consumers in New Delhi, Mumbai, and Chandigarh. The trade policies of India and the success of the vehicle sales there will find out whether or not it is reasonable to actually construct the Volvo vehicles in India.

“We will know about the mid-term volumes by next year, after the study is completed,” Volvo Car Overseas Corp. President Peter Cornelis said. Setting up a manufacturing facility will add to Volvo’s list of expenses. That is why the company is trying to determine first if the plan will fit in its agenda. According to Cornelis, there is a possibility that Volvo will make use of the equipment of Ford India Pvt. Ltd’s plant in Chennai once its volume gets to a critical point.

The company has not disclosed the exact amount of sales it is targeting in its first year of dealing with the automotive market in India. “It’s difficult to say, but it should be at least 1,000 cars a year in future. If we come to a conclusion of investing in local production, it is logical to make use of Ford’s facilities,” said Cornelis.

The next part of Volvo’s study will focus on determining whether import duty will be maintained or will decline. Cornelis said that it is an opportunity for Volvo to analyze the auto trade among its current markets in Malaysia, China, and Thailand. From the conditions of these consumer groups, Volvo can realize possibilities for its new Asian market.