Volvo focussed on Indian luxury car market
Volvo Cars has made little headway in its six years in the Indian luxury car market. During this period, rival European car firms – Audi, BMW and Benz have significantly changed luxury car buying in the country.
But Swedish major Volvo, now owned by China’s Geely admits that it has missed out an opportunity in India. Admitting its mistake is the first step. The second is to create a plan and execute it to expand the market share in the Indian luxury car market.
In an interview with A T Subrahmanya of Wheelsunplugged, Tomas Ernberg, Managing Director of Volvo Auto India who holds the responsibility of overall planning and operations, presented the road map ahead for Volvo to gain a slice of luxury market pie in India.
Q: You entered India around 2007 at the same time German luxury car makers made the entry. But now the numbers say a different story as they have ten folds of sales compared to your numbers. What do you think went wrong and what is the road ahead for Volvo?
A: We came at the right time but that was the only right thing we did. We failed. There were big plans for India. There was major expansion and marketing plans for India. But then we were under ford and there was no major focus as there was major economic crisis. There was minimum investment from the company and it was a freeze. We failed but we accepted that. Now we have a new owner in Geely. We have new CEO and new management team and after re-organizing they asked what are we doing in India? Then we did a survey for five months. We had around 30-40 Swedish management guys coming in and we talked to political leaders, opinion leaders.... We thought about what we were doing wrong. And then by end of 2011, we came up with a solution and I presented it to the new CEO and got the go ahead signal.
Now we have doubled the size of our office, more than double the size of employees. And then we mainly looked at dealers. There were unmotivated dealers. So we have embarked on a vigorous plan to train dealers, technicians. And now we are expanding with more channels. In last four months, all dealers have invested in new facilities. We accepted that we started wrong and but we did not wanted badly motivated dealers but they did not want to leave. So now we have very engaging dealer-company relationship.
Q: Your new car Volvo V40 Cross Country is much awaited now. Are you looking at major numbers from the V40 Cross Country considering it will be competing against compact luxury SUVS which have been generating the numbers for German rivals?
A: The car would be very closely priced to BMW X1, but I don’t think it would be a very big seller in terms of numbers initially. S60 and XC60 would be major sellers for now. But by 2014, it would be a good seller. We are going to offer so many features and it would definitely be a good seller.
Q: You are looking at more than 20,000 units in 5 years. Would you be looking at Geely’s products which might suit Indian conditions?
A: Volvo is owned by Geely holdings but Volvo auto and Geely auto are different companies. Geely Chairman Li Shufu has stated that Volvo and Geely are different brands. There might not be cross collaboration or merger of brands which would be a waste of money for Geely in acquiring Volvo. What can happen is that Geely being a new auto maker, may look for technologies from Volvo.
Q: Volvo Buses are a pretty big brand here in India in terms of luxury and comfort and world over, Volvo cars has a big safety car image. Would you be looking at synergising those images for your cars here now?
A: Yes. Volvo has a big name in safety and by 2020, we will guarantee you will not die in a Volvo car. We are working on that level of safety. But now we are producing cars that are safe but also sexy with lot more luxury and performance. The thing is an average Volvo car lasts nearly 40 years so, there are so many old units and people get the image of old boxy cars.
Q: Do you have any plans for assembly line here in India and also the recent excise duty hike has affected you in anyway?
A: No. we are right now only looking at CBU (completely built units) route. Today we have the prices in competitive range with the Germans. Right now the CBUs are being imported from our plants in Belgium and Sweden. And the recent budget excise duty hike has not affected us as we have 2.5 litre diesel and 3 litre petrol engines, which fall below the specifications for hike. But who knows, if the European Free Trade Agreement comes through, prices might come down too.