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January 19, 1998


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Volvo on Indian highways

Kevin James in New Delhi

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Volvo trucks and buses will soon roar down Indian roads. The $28-billion Swedish commercial vehicles major is planning to launch its trucks, buses and earth moving equipments in India through its wholly-owned Indian subsidiary, Volvo India Private Limited.

"We are interested in bringing our buses and will take a decision soon," said Leif Johansson, chief executive of Volvo AB, in New Delhi last weekend.

He disclosed that talks are on with the Delhi and Bangalore authorities on the bus project and the response has been positive. According to Johansson, while Delhi needs a Mass Rapid Transport System, Bangalore is more suited for its low floor B10 BLE Volvo bus.

"The system will be conceptualised on the same lines as that of Curtiba in Brazil where Volvo buses are currently in use," he added.

The Volvo CEO said his company was also doing a feasibility study on the construction of earth moving equipment in India, which is expected to be of over by end of the current year.

Johansson, who is currently in Delhi for participating in the ongoing Auto Expo '98, also announced the launch Volvo's new truck series -- the FH 12 -- in the domestic market. The FH 12 truck series will be manufacturing by Volvo's Indian wing at its factory in Hoskote, near Bangalore. The factory was set up with an investment of $80 million.

Volvo India Private Limited has already started work on manufacturing trucks of high tonnage and advanced technology trucks in India.

Johansson said Volvo was holding talks with various financial companies in India for financing the sales of its trucks as commercial vehicles. He also hinted at the possibility of Volvo setting up a financing arm in India to offer various financial schemes to successfully market its trucks to Indian customers.

The high-tonnage fuel efficient FH 12 series trucks from the Volvo stable will offer a variety of advantages from increased productivity through higher driver efficiency, special safety provisions, low fuel consumption, and a reduction in both transportation costs and exhaust emissions by 40 per cent and 80 per cent respectively.

The truck has been designed to give the lowest possible air drag, resulting in low fuel costs. These trucks are expected to hit the Indian roads by June 1998.

Johansson said though the company has estimated the total market for these types of trucks at around 5,000 units, it will be able to sell around 100 to 150 units in the first year of production. The Hoskote plant will have a capacity of 4,000 units per year initially.

The company expects its market share in India to grow at the rate of 20 per cent every year. According to Volvo, it plans to double its production every year from the second year onwards. This will enable it to achieve full capacity utilisation only after 5 to 6 years.

According to the company's estimates, it will break even when it would have reached 70 to 80 per cent capacity utilisation. The company is planning to sell the FH 12 truck at a price of around Rs 3.5-4 million per truck, said Johansson.

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