Volvo Won't Ship Chinese-Built Cars to India

A Volvo official from China stated the company does not intend to ship cars from its proposed manufacturing facility in China to India. The Swedish brand was bought by China's Zhejiang Geely Holding Group from Ford in August. The Chinese group said a manufacturing facility would be built in Shanghai.

The Chinese facility would be dedicating to meeting local demand and there are no plans to ship to India, said Paul de Voijs, managing director at Volvo Auto India, as cited by the Hindu Business Line. Instead, the Dutch and Swedish factories were equipped to supply 2,000 to 3,000 units per year, if there's any demand. Regardless of the plant's location, there would be no duty benefits if the car was made in India. While the present import duty in India is 130%, any reduction would be beneficial.

Shipping cars from Antwerp to Kochi would cost about US $1,200 per unit, which is far less than a potential investment in a manufacturing facility in India, with current demand levels for Volvo models.

Volvo's new Chinese plant will be built in the Jiading Industrial Zone and produce C30 and V70 models. It have a capacity of 300,000 cars per year, with production expected to begin in late 2012.

Volvo has recently launched the XC60 in India, importing it from Ghent, Belgium. The company also offers the XC90 and S80 in India and sales last year totalled 114 units. The first XC60 batch of 45 units will probably reach India by the end of January and has already been sold.

Volvo also sources parts from India, buying about US $100 million worth of components two years ago from about 40 suppliers, when the company was a part of Ford.