Volvo Plans to Expand Equipment Business in India

by : Glady Reign

The Swedish company known for its safe cars and reliable trucks has recently announced that they will be expanding their presence in India. This announcement is not connected to the automobile market but the commercial equipment market. The company is planning to produce construction equipments, and road development machines in India.

The announcement came after the second largest truck and bus manufacturer in the world acquired Ingersoll Rand's road construction equipment division recently. Volvo acquired the division for $1.3 billion from the diversified industrial firm. The division has an assembly facility in Bangalore, India and this is where Volvo is planning to manufacture their products.

Eric Leblanc, the managing director of Volvo India Private Limited, announced that the manufacturing facility will be producing Volvo-branded equipments in the near future. Equipments initially pointed out by Volvo to be manufactured at the said facility are excavators and loaders. These equipments will be sold in the Indian market.

Leblanc also pointed out that they are in the process of fusing the operation of the IR division and their own. When the process is completed, it is expected that the manufacturing plant will be producing Volvo-branded equipments.

"We have completed the acquisition transaction globally a month ago and are currently integrating the sales and distribution of road machinery business of IR with Volvo," said Leblanc. "We do intend to use their plant to produce other global construction equipment products in India."

Leblanc claimed that the presence of an engineering base in India will cut down the price of equipments they are planning to market in the country. The engineering base will also help Volvo increase its presence in India while at the same time giving them a head start in coping with the local employees. The brand Volvo will be used on equipments that will be produced by the Ingersoll Rand manufacturing facility.

"Over the next 12 months we will launch new range of products. We already have road development machines in our portfolio like motor graders which will be further expanded," said Leblanc. This shows Volvo's dedication to expanding their presence in the Asian country.

Aside from the planned excavators and loaders, Volvo is also thinking about the development and production of heavy road construction equipments and other road making machineries. The expansion of their offering in the Indian market will increase their share of the market. Currently, Volvo has a 13 percent share in the excavator range market. The company has sold 800 machines like excavators, wheel loaders, and graders which amounted to about $100 million. With the increase in production capacity, Volvo looks to produce and sell more equipment such as that in the country resulting to higher profits.

"Right now we don't have any production capacity for excavators in India. We import excavators from Volvo's Korean plant and sell in India. We are looking to manufacture excavators in India but as of now no decision has been taken in this regard. There is a potential to make them in India," said Leblanc. It is also expected that Volvo will offer for their trucks in India.

The company is expecting that the demand for vehicles that they will produce will increase as the Indian government focus on infrastructure projects. For now, the Swedish company estimates that the road construction equipment market all over the world is worth $4 billion per year.