Volvo will adopt a step-by-step approach to grow its presence in the Indian car market.

Indicating this in an interaction with this correspondent here on Saturday, Paul de Voijs, Managing Director of Auto India Pvt. Ltd., said it was still early days for Volvo in India. Given its financial constraints vis-à-vis competition, Volvo would rather “take one thing at a time,” he said. As such, Volvo would opt for a gradual step-up in operations in India, he added.

The Managing Director said its customers in India had been a happy lot. In the current year, Volvo would add another three dealers to its current network of seven. “You need to have at least 10-12 dealers to cover Tier I and Tier II cities,'' he said.

Mr. Voijs said Volvo had come to India to stay. “We are not here to make quick bucks,” he added. India was among the top five car markets in the world after China, Japan, the U.S. and Germany. The luxury segment (in the price range of Rs.25 lakh plus) would take a while to evolve, he pointed out. Currently, the luxury segment comprised just under 0.5 per cent of the total car market. “There is a lot of room for growth,” he pointed out.

The Managing Director said there were lots of similarities between the Russian and Indian markets. The luxury segment in Russia grew almost 10 times in a decade to five per cent of the total car market in 2008. Both in Russia and India, cars had become a symbol for success to a large number of people, he said. He also found the percentage of lower segment in the overall car market going down in both the countries.

The immediate task before Volvo in India was to get established, to spread the brand awareness and to work on building the foundation. In this context, he said the dealer network was indeed a key to success. Mr. Voijs said Volvo sold around 91 units in 2008. This was up by around 50 in 2009.

Currently, Volvo imports its vehicles into India in a CBU (completely built unit) format. Volvo took to the CBU route to make a foray into India because it wasn't experienced enough to gauge the size of the Indian luxury market. For another, it was hoping that the import duty on CBUs would be cut. The import duty, he said, could influence the break-even point for the company should it opt for a local facility. Also, Volvo's facilities in Sweden and Belgium “don't run to full capacity,” as such, he said, ``we don't need extra capacity.''

He was confident that the duty would come down and the volume would pick up over a period of time. In such a scenario, the fixed cost would have to be covered,” he said. “We are working on getting a sound and health base for the future,” he added.

Mr. Voijs said Volvo was planning to add to its existing product portfolio in India by bringing in XC 60, a sports utility vehicle, and S60, a smaller sedan. “We are working on homologation for XC 60 to be imported from Belgium,” he said. Volvo was working on a world-wide launch of the smaller sedan, he added. “There is more potential at the lower end of the price pyramid,” he pointed out.

Volvo took its first step in the growing Indian automotive market in September 2007 with the launch of its two flagship models — Volvo S80 sedan and Volvo XC90 sports utility vehicle. These are imported from its plant Sweden. The Managing Director said Volvo was trying to create brand awareness by participating in the Chennai Open tennis tournament and through product placement in The Three Idiots movie.

More In: Companies | Business