Volvo Auto India to challenge rivals Mercedes Benz, Audi & BMW in compact luxury car segment

MUMBAI: Chinese carmaker Geely-owned Swedish luxury car brand Volvo is set to enter the compact luxury car race in India and challenge the German rivals Mercedes Benz, Audi and BMW with two new offerings in the sub-Rs 30 lakh bracket.

A small luxury hatchback V40 diesel and V40 Cross Country with 1.6 litre petrol engine will be launched in the coming few months as the Scandinavian carmaker targets 65% growth in India in 2015 to touch the 2,000-units mark in annual sales.

Volvo Auto India is aiming at a 15% market share in the medium term, managing director Tomas Ernberg told ET in an interview. The company's expanding product portfolio and dealer network in key markets such as Mumbai and Delhi, and some of the smaller cities such as Vijayawada, will play a key role, he said.

"We set out on a growth plan a few years ago. In the past three years, we have seen our dealer footprint increase to 20 from five and sales have increased multi-fold. We should be closing the year with 2,000 cars led by the newer compact car," said Ernberg.

Apart from the new compact offerings, Volvo also plans to launch the new S60 T6 petrol sedan and a 4-cylinder diesel XC 90 SUV in September. Ernberg said that while Volvo has created a space for itself in Hyderabad and Tamil Nadu, where it has market share of 12-15%, the company's presence in Mumbai and Delhi is still minimal.

With opening of new dealerships like the one inaugurated in Mumbai on Friday, he said, the company hopes to sell 200 cars in 2015 and 400 cars in 2016."We expect the market to grow 10-15% in 2015, but led by our new products we will grow faster albeit on a low base. But once we touch 2,000 units by the end of the year, the ball should start rolling and we will aim at 10,000 units in a few years' time," said Ernberg.

Once volumes start kicking in, Ernberg hopes that the parent company will take a call on the assembly plant in India, which will help Volvo compete more aggressively with the German rivals.

While Ernberg was non-committal on the timing of the assembly plant, other people familiar with the matter said the company may take a decision this year and the plant may come up in the next two years.

Ernberg said Volvo will differentiate itself from the three German rivals on the key pillars of safety, technology and well-being.

As part of differentiating features, Volvo Auto India will have air cleaners in the car to offer a cleaner cabin and safety will be at the core of its design. The company also plans to launch next year its XC90 diesel hybrid, which it claims delivers higher fuel efficiency than Maruti Suzuki's small car at 37 kmpl.