Will be done through a JV, in which Volvo plans to invest Rs. 125 crore
Swedish auto manufacturer Volvo Group, on Wednesday, said that it would launch the UD buses range in the value segment by the end of this year through a joint venture with S.M. Kannapa Automobile Pvt. Ltd.
Disclosing this to presspersons here, Akash Passey, Volvo’s Senior Vice-President (Bus operation — Asian Market), said the group would invest Rs.125 crore in the joint venture, in which Volvo would be holding 15 per cent stake.
The Volvo Group bought the Japanese company UD buses, formerly Nissan Diesel, in 2007, but had stopped production of UD buses in 2010.
The 12 metre-long buses and coaches will be manufactured at a new facility between Hosakote and Kolar near here. The initial capacity of the plant, which will commence operation this year, would be about 500 buses, and it would be scaled up to 2,000-2,500 buses annually.
In the initial phase, Mr. Passey said: “Volvo will supply technology, design, brand and chassis to the joint venture. The local content would be 40 to 45 per cent, which would be scaled up to 80 per cent in a few years.”
According to him, the Rs.125-crore investment, which will also include development of the necessary ecosystem for the brand, is part of the overall Rs. 400 crore that Volvo plans to invest in India. He, however, declined to comment on the employment opportunities to be generated by the new plant. Without specifying the cost of the UD buses, he said the brand would be positioned between the value segment, which is now Rs.20-25 lakh, and the premium segment, which is above Rs.80 lakh. “The price will be in the upper value segment,” he said.
Mr. Passey said the company was looking at Tier-II cities in India, where the UD bus would be first introduced, and would later look at exporting the vehicles to other markets. Volvo Group President (Bus Operation) Haken Agnevall said: “India will be the central focus for the UD buses brand for the global market. It is a distinct brand within the Volvo brand.”
“The UD buses have been developed specifically for the growth markets. We do not produce UD buses anywhere,” Mr. Agnevall added.