TDB: Volvo has been present in the Indian market for over eight years now. How has the journey been so far?
Tomas Ernberg (TE): I am quite optimistic and positive. If you look at the Indian market, demand for luxury goods has increased quite tremendously. If you see from Volvo’s point of view, we have been the fastest growing luxury car brand in India for the last three years. We are growing very fast and we appreciate the market. The future is very bright. Although the luxury market is very small in India today, it is expected to expand phenomenally in the near future.
TDB: Major German auto brands – Mercedes-Benz, BMW and Audi – have a strong presence and recall among Indian luxury consumers. Why has Volvo not been able to catapult itself into the same league yet?
TE: I think we need to make two comparisons here. You may be partly right. In India, the three German brands, you mentioned, might have a better image than Volvo cars. When you think of luxury, you might first think of these three brands. But if you look outside India, Volvo is a luxury brand that fights with the best in the business. The position that we took here three years ago was exactly that – let’s get up and fight and take our place in the Indian market. And slowly, we have increased our segment share to 5%. We are aiming to have 10% segment share by 2018, and a 15% market share by 2020. That is the right target and the target that we have in mind worldwide, which is 15% of luxury brands. So, you are right from one point of view. We started a bit late. Mercedes-Benz has been here for a very long time. The Germans have also become more aggressive, a lot more aggressive. But Volvo is also not the kind of brand that will open up hundreds of dealerships in a short span of time. So, we take our time, we do it the Volvo way. We make sure that when we get a new dealer, it is for the long term.
TDB: How do you plan to scale up and achieve this 15% market share target by 2020?
TE: We have been achieving our targets for the last three years in India and we will continue to do so. Next year, we will almost double this year’s volume, with the help of new models, increased networks and increased brand awareness. Nothing is easy in the world, but reaching the target is not impossible. It can be achieved with the right strategy in place.
TDB: Does your strategy also include newer, untapped markets within India?
TE: Of course. Today we are not present in Orissa, Jaipur, Vijayawada and Udaipur. These are some markets that we are looking at. Some of them do have the absorption power for luxury goods. And we will tap them one by one. This year, we are entering Surat. Kolkata will be opening up this month as well. For next year, we are looking at Baroda, Rajkot and the rest of Gujarat. We want to strengthen our base in Mumbai as well. Mumbai is a very big market. We have a new dealership and will be coming up with two new facilities in Mumbai. In Delhi, we had just one showroom for the last many years. Now we have four, if we add the one at T3 terminal as well.
TDB: At one point in time, speculation was rife that Volvo might be considering shutting its operations given the low sales graph. What really has led to the change in strategy in India?
TE: No, that was never the case. I think where you are coming from is that at one point in time we were owned by Ford Motor Company. And Ford was in dire straits before Alan Mulally came to the helm of its affairs. Mulally had three targets: Ford, Ford and Ford. Land Rover and Jaguar were sold off to the Tatas; Aston Martin and Volvo were also sold off. Ford had no interest in investing in India as its interest was to sell off Volvo. So, we actually could not do what we wanted to do in India. Post that there was also the global financial crisis. So, we thought it’s better to take a step back before we invest further. But by end of 2012, we realised the growth potential in India. New ownership was the biggest change for us. With the Geely Holding Group taking over, today we feel 100% independent. We can actually take our own decisions and also be accountable for them. When we were part of Ford, we were part of a very big motor company. But in Geely, there is nothing else. The new design language of Volvo is smaller engines but with higher mileage and higher horsepower and torque. Volvo will now only produce four cylinder cars that will be environmental friendly and deliver what the customers want. We won’t be producing cars that pollute as much as competition does. We now have some of the least CO2 emissions among all luxury car brands in the world. In India, government policies don’t take note of this yet, but I think sooner or later cars will be taxed based on emissions that they let out. This will put us in an advantageous position. We will also produce cars that will guarantee you that you will not lose your life. By 2020, if you sit in a Volvo car, and you have the Volvo seat belt on, we promise you that you will not die or get injured. No other luxury car brand can promise that. Only Volvo can say this. Even today, our cars are the safest in the world.
Tomas Ernberg, Managing Director of Volvo Cars IndiaCopyright @2024 The Dollar Business. All rights reserved.
