Shrawan Raja caught up with Tomas Ernberg, Managing Director of Volvo Auto India, in Chennai. As the Swedish manufacturer is gearing up to expand their sales and service network, updating existing products and launching lower priced models is vital to closing the gap between it and the German brands. So what does Volvo have in store for India in 2013? Here’s what he had to say:
Will the next-gen Volvo XC90 be the first model based on the new Scalable Platform Architecture? What can you tell us about that?
Yes, the XC90 will be the first car on the Scalable Platform Architecture. It is an investment that Volvo has undertaken a year-and-a-half ago so a lot of money has gone into the new products. The vision is to be the most progressive, desired luxury brand, and the focus in the future is a lot more on luxurious and technologically advanced cars.
Do you see a future for the Volvo V60 wagon in India?
Globally 50% of our sales have been station wagons, but in the last couple of years we have been strong in the ‘XC’ (crossover) segments. We haven’t yet decided to bring it or not, what I would say is we won’t bring it in 2013, but perhaps in the future we would look into the possibility of bringing a sports wagon like the V60.
You have announced that a new entry-level model, the Volvo V40 Cross Country, will join the Volvo India portfolio this year. What can you tell us about that?
Based on the V40 hatchback, the V40 it is a little higher, looking a bit more off-road, but not an off-road vehicle. The main competition for the V40 Cross Country would be the X1 and the B-Class. Our car would come after April, and we would be bringing in new and more advanced technologies than the competition, so we intend to have a better car compared to the competition.
To start with, there will be no all-wheel drive on the V40. We will bring a 1.6-liter petrol and 2.0-liter diesel (Ford powertrains) for 2013. In 2014 we will see whether to introduce all-wheel drive at a later stage, but at the moment there are no plans to bring the AWD variant. Part of the reason is also that AWD technology is available only with a petrol engine globally. Our share in sales is 99% diesel and 1% petrol in India, and that will continue for a couple of years, making the all-wheel drive an unlikely possibility.
In the future we will have a VEA (Volvo Environment Architecture) engine series. These engines will be fitted in all of our cars (replacing the existing Ford powertrains) in 1.6 and 2-litre capacities. We are going to produce a lot more environmentally friendly cars fitted with smaller engines with higher outputs and torque. Compared to the competition, we will only do environmentally friendly engines, we won’t do V8 cars, as we don’t produce engines displacing above two liters. That’s the future. A few years down the line, we will have 1.6 and 2.0-liter cars in both petrol and diesel. We will have more than 300hp on a 2-liter engine, but we will also have different levels of outputs on our engines to suit different products, while offering economical efficiency and lesser emissions.
Would you price the V40 Cross Country below rival offerings?
The V40 would not be cheaper than the B-Class or the X1. Instead, we will bring a better car, better technology, better engines, and more options so in effect the customer gets more value than the competition. This way we can defend a higher price by offering more value.
What are your plans on the retail strategy considering that you have a very limited network of dealers now?
Starting in 2012 we have gone from 5 sales outlets to 13 by March. We are available in all major cities except for Kolkata, which is a priority for this year.
Like your German rivals, do you plan to assemble cars in India in the coming years?
Customs duties and tax have been stable in India for sometime. Today what we should look at is, are we able to import cars and price them where we want? The answer is yes. We import the S60 and we are able to compete with the C Class, 3 Series and A4 on the price front. We also import the S80 and XC90 and it’s the same story, so at the moment we are very secure where we are. At 20,000 cars (the forecasted sales target for Volvo India for the year 2020), we can still import them as CBUs.
If we are able to price ourselves fine, we will go as we are. There’s one free trade agreement discussion that’s on going, so who knows what’s going to happen in the coming years, maybe the tariffs will go down. Until we reach a situation where the pricing goes out of the desired range, we don’t really see us establishing an assembly plant here.
As Indian users tend to frequent their rear seats even on smaller executive sedans, are you considering the launch of long wheelbase models?
Only China has the long wheelbase versions of our cars, and it will continue to be that way for the foreseeable future. Those cars are assembled in China, and we don’t produce long wheelbase cars in Sweden or Belgium, our main factories. These are only for China and in LHD format, so they won’t be coming to India.
Do you plan on bringing R Design models for India as brand builders?
There are initiatives on this, but for 2013 I’m not sure if we will bring performance cars, but that’s something we’re constantly talking about with our dealers.
Would you introduce the regular Volvo V40 variant for India as a new range starter in the future?
We have no plans to bring the normal V40 to India, not the basic version. For the moment I don’t see us fighting in the sub-20 lakh segment, we won’t do that.
Are you considering sourcing components from Indian vendors for your cars?
Today we have sources from Tamil Nadu for worldwide operations. We have a supplier who makes radiators in Coimbatore, so perhaps there is more sourcing from India. I would think that it would increase if there were more opportunities. India is developing very fast, the knowledge is increasing, and there is a bright future as far as sourcing is concerned.
Can we expect to see an in-house customer-financing arm for Volvo cars?
At the moment, I don’t think so. We worked with ‘Ford Credit’ (like an in-house captive finance provider) under Ford’s ownership, and after the break-up, we have been an independent company for a-year-and-a-half, and we’re establishing an in-house service called ‘Volvo Finance’ which is a couple of years from being launched globally. We have collaborations with two major banks here, which help us a lot with finance to our customers. 60-65% of customers use finance services when they purchase their Volvo.
Shrawan Raja is the Managing Editor of the daily updated https://indianautosblog.com/
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