Plans to increase export volume from India
India, China to be Asian sourcing hubsTo bring global platform to produce busesPlans to source more heavy components from India
BANGALORE: Volvo Bus Corporation, part of the Volvo Group, plans to raise production capacity of buses at its plant on the outskirts of Bangalore to about 1,000 units a year from 450-500 buses comprising a mix of tourist coaches, inter-city and city buses to meet the projected annual growth rate of 25 per cent in this segment, its President and CEO, Hakan Karlsson, said here on Monday.
During 2005, sale of Volvo buses in India grew by about 30-35 per cent over 2004. "We would continue to look at India and increase volumes in the magnitude of 25 per cent annually. To cope with the demand, we need to increase the capacity," Mr. Karlsson told reporters here during his first visit to India. He said Volvo planned to increase the export volumes from its India plant to about 20-25 per cent.
"Currently, we export 10 per cent of our volumes outside India, mainly to Bangladesh and other South Asian regions. We need to raise this to 20-25 per cent in the short-term to countries in Asia and the Middle East," he said.
Outlining Volvo's strategy for India, Mr. Karlsson said the company would bring the global platform to manufacture buses, localise the components here and use India together with China as an Asian sourcing hub and an export hub to neighbouring countries in the region.
Volvo currently sources about 40 per cent of the components used in a complete bus from India.
"The next step is to increase this to 60 per cent and in the next stage we will see whether we can source more heavy components from India. Together with China, India is among the key emerging markets sourcing hub identified by Volvo. These markets are not only characterised by their cost advantage, but also by their emerging population of globally capable suppliers," he said. The components that were sourced locally from India could also be used for its worldwide operations, he said.
With a track record of good growth in inter-city and tourist coach segments during the last four years, Volvo has moved into the city bus segment by selling 25 such buses to the Bangalore Metropolitan Transport Corporation (BMTC).
Volvo India notched a turnover of Rs. 650 crore in 2005.