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Our Bureau

Bangalore, Aug. 13

AB Volvo is seeking a partner for building entry-level trucks in India and may locate its Asian engine plant in the country.

AB Volvo’s Executive Vice-President and Deputy Chief Executive Officer, Mr Jorma Halonen, told newspersons on Monday that it plans to set up a manufacturing plant in India to address the volume market.

“If we have to be a volume player in India, we need to tie up with a company that can get us numbers as quickly as possible,” he said.

Mr Halonen said Volvo could either set up a joint venture or have a technical arrangement with a company for the new plant. Volvo had earlier indicated that it is also looking at setting up a construction equipment plant in India.

Volvo India produces about 1,000 units of truck sizes of 16 tonnes and above per year, while the total market size in the country is about two lakh units.

Mr Halonen said the company is now in talks with a few companies in India to set up this new venture. There is a good possibility that the new plant could be located near Bangalore where Volvo India already has a truck production plant.

He said currently the indigenisation level of trucks made in India is around 20 per cent compared with 70 per cent for trucks made in Brazil. “We want it to be about the same level as in Brazil to become more cost effective,” he added.

Mr Halonen also said that India is one of the locations that Volvo is considering for setting up an engine and transmission plant for the Asian market.

In February, Volvo had announced that it was planning to set up an engine and transmission plant in Asia. At present, Volvo produces about three lakh engine units of various types globally.

The revenue share from Asia, which is currently about 8 per cent, could rise to 18 per cent because of the huge market potential which exists in the continent.

Mr Halonen said there was a possibility that products from the recently acquired Nissan Diesel could be assembled in India.

He said Volvo will continue to study those countries which provide low cost, high volume business for setting up plants.

Wages in India are one-third of those in Europe and the Americas, and hence, it continues to be an attractive destination for AB Volvo, Mr Halonen added.

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