Saturday, January 15, 2005
Volvo India to build trucks for Korea
Our Bureau / Bangalore January 14, 2005
Volvo India Private Limited, a wholly-owned subsidiary of Swedish truck maker AB Volvo, has been chosen by the parent company to assemble trucks that will be exported to South Korea, senior company officials told reporters here on Thursday.
This is the first big export foray by the Indian subsidiary outside the SAARC countries. Company officials feel this is a beginning and the cost advantage India offers, combined with the growing global aspirations of Volvo’s tier 1 suppliers, could see be bigger opportunities coming its way.
In the last six months, Volvo India has already built and delivered to the parent company some 150 trucks, in the 18 tonne and 20 tonne capacity, meant for a host of buyers in Korea, Ulf Nordquist, managing director of Volvo India said.
The value of the export order, of trucks named FM 12 for the 12-cylinder engines they have, was not revealed. “But to give you a perspective, FM 9 which we sell directly in India costs Rs 52 lakh for one unit,” says Nordqvist.
Exports closer home, such as to Bangladesh and Sri Lanka, were catered to by Volvo India, but export orders such as the one to Korea however were met depending on what the parent company asked for.
“The 150 trucks were not a one off order. We have now been chosen to build trucks for the Korean market. With the opening up of the market for Volvo India, there may be opportunities to build trucks for other countries in the region as well,” Nordqvist added.
Volvo India has a truck assembly plant in Hoskote taluk, an hour’s drive from Bangalore city, that can make 1,200 trucks and buses a week. It can be expanded quickly to build 2,000 vehicles, says Klaus Fox, a vice president heading industrial operations at Volvo India.
For the year to December 31, Volvo sold some 1,100 trucks in Korea, mostly to customers who were often also the drivers of the trucks. Apart from the 150 trucks built here, the rest were built in Sweden, Fox said.
The Hoskote plant won the mandate to build those trucks in competition with other Volvo centres worldwide, he says. Most others were either too large and catering to their own markets, or too small.
Volvo’s biggest plants are in Europe and the US, followed by a 4,000 truck plant in Brazil that caters mostly to the markets in that region and one in Australia.
“A lot of activity is happening in China where we are setting up a plant... clearly these two regions (India and China) are very important for us, as they are the fastest growing markets.” The traditional markets in the EU and the US are saturated where “we are the second largest truck makers, after the Mercedes group”, he says.
Last year, the three brands of trucks that AB Volvo sold — Mack in the US, Renault from France and Volvo — accounted for a 10th of the market for such trucks, says Mansoor Ahmed, a vice president heading marketing with Volvo India.
In the six years since Volvo India’s first truck rolled out from the Hoskote plant. Volvo has sold some 1,900 trucks and 500 buses in India. It has also trained 8,500 drivers on its vehicles, and established some 50 customer support points across the country including five large facilities capable of major overhauls of the trucks.
Volvo India also exports components to various Volvo centres worldwide, Ahmed said. Last year, the company exported components worth some 26 million euros, which was a 100 per cent jump over the previous year. This year, Nordqvist says Volvo India aims to export components worth some 40 million euro.