Good Time To Invest In India, Says Volvo India Head Tom Von Bonsdroff

Volvo, the Swedish automaker, had an eventful 2016. When almost every luxury carmaker struggled to boost sales amidst diesel ban and demonetisation, Volvo grew at a rate of 10-11 per cent. The company, currently having a market share of 5 per cent in the Indian luxury car segment, wants to double it up to 10 per cent by 2020.

Tom Von Bonsdroff, managing director, Volvo Auto India, says he is trying to convince the headquarter to set up an assembly unit in India as Volvo witnessed two years of consecutive growth. He says, “Volvo is growing in India and it is a good time to invest in the country.”

In an exclusive interview with BW Businessworld, Bonsdroff speaks about the opportunities he seeks in the domestic market, how Volvo is ready for BS VI emission norms, what differentiates its newly-launched performance car, the Volvo S60 Polestar, from others in the segment, and much more.

Excerpts:   

The domestic luxury car market growth has been stagnant for the last two years. Going forward, how you see the market shaping up for the industry and Volvo?
If you look back two years, we had a double digit growth in 2015 at 18 per cent and last year we grew at 11 per cent despite the fact that November and December were lousy months owing to demonetisation. So, I think the segment is not growing as fast as we would have liked. I really hope this year would be better if there are no macro-economic disturbances. Last year was very stagnant.

The first quarter had a double-digit growth and we plan to keep it that way for the rest of the year. We believe the S90, XC90 and other new models will drive growth. We aim to have 10 per cent share in the luxury market segment by 2020 from 5 per cent now. I am quite hopeful we will achieve it.
 
When will we see development in the assembling unit you are planning to set up in India?
My job is to convince the headquarter that it is a good time to invest in India. Now we had two good years behind us and this year seems to be shaping up well. India’s GDP is growing by 7 per cent and Volvo is also growing in India. That is the best way to convince the management in Sweden that it is the best time to invest in India. I am really hopeful that we will have a decision soon.

Will your pricing policy remain the same after Volvo comes up with a local assembling unit?
Well, we follow global pricing guidelines in India, which means that our vehicles are priced taking into consideration how other vehicles are priced in the same segment. Like Volvo S60 competes with Audi A4 or BMW 3, we aim to have the same price or XC90’s price at the level as Q7 or X5. Right now, we are following that price line and we will follow the same after coming up with the local assembling unit.
 
How will you differentiate S60 Polestar with other performance cars? How good will it perform given the traffic conditions?
There are two things that engineers at Polestar are very happy about. One, the chassis and special shock observer are very good. It makes handing of the car very easy. The other thing is that they are very happy about how they work on city roads. It actually gives you a good comfort on city roads. I think that might actually be the differentiator when compared to some of the other cars in the performance segment.

How many units of S60 Polestar were sold globally last year? What numbers are you expecting in India?
Last year, we sold 1500 units of S60 Polestar globally. In the domestic market, we expect to sell 30 units of this car in the next few months.

What are the big launches coming from Volvo in 2017?
In Q2, we will be launching S90 cross-country, which is a cross-over car related to the XC90 model. The new XC60 was launched in March in the global market, so I think it will be very late this year or early next year for an Indian launch.

Are you prepared for the BS VI emission norms?
I hope they would come in quicker because we are already ready for it. I think the government’s ambition is good that by 2020, there should be BS VI compliant vehicles. This means that all cars should have a decent particle filter. To meet that demand, we know the diesel particle filter standards in our cars, these take way more than 90 per cent of the 2.5 PM (particulate matter) pollutant and this is a good thing for Delhi.
 
Was it only the rise in input price that Volvo raised prices by 2.5 per cent across its line-up?
There is certain inflation all around the globe on components’ price. That is the main reason we increased the price.
 
Which market at present is generating maximum sales for Volvo?
In India, last year, South was the biggest. The biggest contributing state was Tamil Nadu. Globally, China is the biggest market for Volvo.  

How is Tier II and Tier III market doing for Volvo?
We not only want to expand more in big metro cities, but also want go in Tier II and Tier III markets. We have dealership in Visakhapatnam, Vijayawada and Surat. We will be opening up for new dealerships very soon. We opened up in Jaipur in January. Now we will open up in Lucknow, Ludhiana and Pune and a fourth facility in Delhi. We want to expand the service network so the customer can feel confident that you can get your car serviced. Right now, we have 17 showrooms and we will end up the year anywhere around mid-20 showrooms.