Chinese-owned Swedish car maker Volvo Auto India has changed its pricing strategy by introducing cheaper variants of three of its four models. It also plans to introduce an entry-level small car that will compete with the likes of BMW India Ltd’s X1 and Audi India’s Q3.
The firm on Wednesday launched new versions of the S60 and S80 sedans and the XC60 sports utility vehicle, all driven by a 2-litre diesel engine. The models are at least Rs. 6 lakh cheaper than the 2.4-litre diesel engine vehicles that are sold in the country, the firm said.
The firm said the price cut was aimed at raising sales to 20,000 vehicles a year by 2020 from 320 last year. Luxury car sales in India are estimated at 150,000 units by then.
“When I first came here some time (at the) end of July, I faced a lot of questions with regard to pricing as compared with other luxury brands,” said Tomas Ernberg, managing director, Volvo Auto India. “We are introducing aggressive pricing strategy in our existing car line with new engines.”
An expert with a consulting firm said the price cut will help Volvo find more dealerships. “The company was finding it hard to find dealers as there were no margins due to low volumes,” said the expert. “This price correction is just another step in that direction.”
The company, which entered India in 2008, only has seven dealerships in the country. Sales have lagged behind German rivals BMW, Mercedes India Pvt. Ltd and Audi AG. Volvo Cars is owned by Chinese auto maker Zhejiang Geely Holding Group Co., which bought it from Ford Motor Co. in 2010.
“Our competitors have grown very quickly in very (little) time. We have a lot of catching up to do. We are not.. where we should be today,” Ernberg said.
Volvo’s entry-level car may be introduced early next year, he said.
“There is a complete new small car coming by the end of this year at the global level,” Ernberg said. “We will be launching that car in India in the first quarter of 2013 (calendar year). We haven’t had a discussion on the pricing front yet but a bracket of Rs. 20-25 lakh would be reasonable.”
Ernberg said the entry-level car will play a key role as Volvo aims to be one of the top three luxury car makers in the country by 2020. The firm wants to sell 800 cars in India in 2012, more than double what it sold last year. The firm will continue to import cars at least in the near future rather than setting up an assembly facility in the country.
February 21, 2012
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