‘Our goal: To lead the luxury EV space’

Sweden’s Volvo Cars has emerged as a force to reckon with in the Indian luxury automobile space, having garnered significant sales volumes and market share. The company grew 28% last year, and is aiming for faster growth this fiscal. By 2020, it targets 10% market share, from the current 5%.

Carefully understanding the rapidly changing Indian market trends, Volvo is steadily evolving a long-term strategy that involves launching relevant products, pushing localisation, pursuing electric mobility and ultimately boosting customer satisfaction. As part of this path, it recently launched the compact XC40, which is expected to swell the company’s fortunes in India. Volvo Car India Managing Director Charles Frump tells DH’s Hrithik Kiran Bagade about expectations from the new compact SUV, along with the company’s direction, in this candid interview. Edited excerpts:

What’s the latest update from Volvo’s production facility in Bengaluru?

We started out in October last year with our new facility here, with only the XC90. The good news was, we had a very smooth ramp-up, and now we produce 95% of our XC90s here, with the exception of our Excellence model. We also brought in the S90, thus expanding our plant. And now, we are looking at adding the XC60 this quarter. Our approach is to add new car lines as we go forward. With the XC60, we should have over 50% of our sales volumes coming out of this facility.

Also, one of the things we are talking about now is localising our plug-in hybrids, which means, we’ll be the first company to be achieving this.

You spoke about 50% of your sales volumes coming through the Bengaluru plant. What are your sales volumes currently?

Last year, we sold roughly over 2,000 cars. This year, YTD (year to date) we have sold 1,242 cars, which is 33% over the same period of the previous year. We are one of the fastest growing luxury car brands in India. We are getting great support from Sweden with a lot of resources, great cars being launched, and we are also expanding our network considerably.

Are you looking at more expansion in manufacturing?

Right now, we have a very good setup, partnering with our ‘sister brand’ – Volvo Group. We are taking each car line and localising it, with it making the most sense. We are localising based on our SPA (Scalable Product Architecture) programme, which has been our approach so far, and we will continue the same as long as a majority of vehicles are localised here. But it’s largely localisation of assembly that we are talking about.

Are you looking at further investments surrounding manufacturing or any other potential areas?

Our major investment when we first came to India was in building the CKD (Completely Knocked-Down) assembly facility in Bengaluru. We have also opened a parts warehouse in South Mumbai for all our models. Although not sounding as the most exciting, it’s almost a game changer for us. Prior to this, dealers had to source parts from Sweden, which would take a week or more, and store them in their dealerships. It would be very frustrating for the dealer, as well as customer. If needed, we can now supply parts directly to dealers anywhere in India, which frees them from the loaded paperwork, thus resulting in lower costs and customer satisfaction.

Investment-wise, our dealer-partners are investing massively to strengthen their network. We have opened three dealerships this year, one each in Kolkata, Raipur, and Kozhikode. Now we will open one per month through the year.

Given the ups and downs that have affected the auto market, how do you view its current trends in the luxury space?

The luxury space is growing faster than the overall market. As a carmaker, we are seizing the opportunity and increasing our share of that market. I think it will continue to grow. Without any major changes, there is increasing appetite among customers for luxury products, including cars. That trend is on our side.

When taxes go up, less cars get sold. But there’s always room for improvement on that front. Often, we tend to focus on the negatives in government policy. Some of the things that’ve been accomplished have been great. For instance, GST has improved the way we can do business here. We are getting our hands around it now, and in the last one month or two, it has largely been stabilised. We are learning from it, and it has become our normal way of doing business.

Strategically, the government is thinking on the same lines about electrification. They are thinking - 2030, when there would be large steps towards electrification. There is going to be some confusion, as it’s a whole different world one is talking about. However, in general, the direction is good and a lot of good things can happen.

You recently launched the XC40. Aren’t you a little late in the booming luxury compact SUV space?

It’s the hottest segment in the luxury car space. Yes, timing-wise, we are the newest entrants in that segment. In that perspective, it’s fantastic for us. The car that we are bringing, if we compare with some of our competitors’ products, the latter are really not SUVs. The XC40 is a true SUV, if you observe its proportions, and it drives its part well. It’s already a winner in all its markets.

How do you view the compact SUV market shaping in India?

This market stands at 6,000 cars every year, and is pretty well-divided between the Germans at the moment. But with the XC40, we have got good success in the compact SUV space. Since we have already made a big impact in the larger SUV market with the XC90 and XC60, we are certain of a similar response for the XC40.

How will the XC40 impact Volvo’s fortunes in India?

This is a new segment for us. In the past, we have been growing very strongly. The XC60 for us is our highest-selling car. When you bring in the XC40, it is ‘volumes sitting on top’ for us, and that too competing in a new segment, with newer and younger people coming to our brand and dealerships. This is going to be one of our top-selling cars, so it’s going to be really big.

Considering that compact SUVs sit in the mass space within the larger luxury segment, wouldn’t it be prudent to manufacture the XC40 locally?

We are definitely looking at it. What we did with our existing locally-assembled range was to first bring them in as CBUs, and then to establish their market. Within six months of them being on the road in Europe, we have brought them to India. No other auto manufacturer has done this so quickly. So our approach is to launch a car in India as CBU, and then localise it. A similar approach will be used for the XC40.

Volvo is eyeing a strong electrification strategy for 2019. What would be its impact on your India road map?

From 2019, all new cars we bring in will have some form of electrification – mild hybrid, plug-in hybrid, hybrid or full electric. Eventually, even the cars assembled at Bengaluru would carry this element.

We were the first company to have launched a diesel hybrid. Now our emphasis has moved to plug-in hybrid, as it is one of the best solutions in place until the requisite infrastructure for full battery-electric mobility is ready.

We are growing in tandem with India’s 2030 plans. The road map isn’t exactly clear right now, in terms of infrastructure or taxation, but they have the right goal in sight. This is a major change, and they may need some time to realise their goal, while it remains our goal to be the leader in luxury electric vehicles.

What is Volvo up to in the realm of driverless cars?

If you look at the automotive industry – electrification, autonomous driving and connectivity are the three forces transforming it. We have a very robust approach towards autonomus drive as well. In India, where baby steps are on towards autonomus driving, we are absolutely the leaders – with our suite of radar systems, pilot assist, and auto braking.

DH News Service