Volvo is in talks with potential local partners to strike an agreement which will allow it to use an existing plant for the assembly plan. This way the company will not have to invest in a greenfield plant, which in turn means cost savings and quicker turnaround time. Sources in the company's Gothenburg, Sweden headquarters indicate that the likely partner will be Volvo AB, the Swedish company that shares only its name and logo with the car maker. Volvo AB has an Indian subsidiary which makes buses with a captive plant in Bangalore. Volvo AB also has a joint venture in India with Eicher (Volvo Eicher Commercial Vehicles) to produce medium and heavy trucks. Volvo Cars is owned by Chinese carmaker Geely.
The move to set up an assembly operation will help Volvo scale up in the market that already sees fierce competition between other luxury marques - BMW, Audi, Mercedes-Benz and Jaguar Land Rover. Volvo currently sells the S60 and S80 sedans, and the XC60 and XC90 SUVs in India. It plans to debut the V40 Cross Country in the next few weeks.
Currently, Volvo is well behind the German brands in the luxury car market and had sold 820 cars in India in 2012. Audi and BMW clocked over 9,000 units each during that time.