Volvo Cars gears up for a renewed push in the Indian luxury market

Martin Persson, head of Volvo Cars for Asia Pacific, excluding China (APeC), has no illusions about his company’s way forward in the Indian market. Even as he reveals that the Swedish automaker is preparing a new ‘comprehensive plan’ to realise the ‘enormous potential’ of India, he hastens to add that he doesn’t expect it to be easy.

"It will not come to us automatically. We need to take certain steps and work with different things to capture that potential," he said, adding that he was not looking for a silver bullet. “It is about investing in our brand in India, expanding the dealer network, and digitising the consumer journey, and so on," said Persson, on a visit to New Delhi, to understand the potential offered by India’s luxury car market for the Scandinavian brand.

Indeed, the brand has miles to go in India, unlike in markets such as Japan and Korea where it is well recognised. Despite the 30% increase in sales last year, it sold a total of only 2,423 vehicles in India in 2023. It does not do any manufacturing in India and brings its five models in a CKD form, which is currently the norm in the premium car segment.

Electric Focus:
Volvo Cars is globally known for having a rather aggressive EV transition plan, having committed to go ‘completely electric’ by 2030. This has impacted its strategy in India: Two out of the company’s five models in India are electric, and the brand has plans to bring one new EV to India every year. “Perhaps we are not in total sync with the market, but in the long-term, we are totally convinced that it (going fully electric) is the right strategy. We are here for the longer game — we are running a marathon, not a sprint,” he added.

This year, therefore, the company will launch its single-motor Volvo XC40 Recharge in India, followed next year by the EX30 small SUV, and the EX90 full-size SUV in 2026. According to Persson, new products are key to stimulating the market.

Martin Persson: "In the long-term, we are totally convinced that it (going fully electric) is the right strategy. We are here for the longer game — we are running a marathon, not a sprint."

“While so far, the choices of EV products available to customers have been quite narrow, they will now grow, as, not just Volvo, but even our competitors will bring more attractive products. And this will be a key reason driving electrification in India in the future, as there will be a lot of stimulation to the EV market from the supply side going forward,” he said.

At the same time, Persson admitted that EV penetration leaves much to be desired in India, like in other APeC markets such as Japan and Korea. “With a 1-2% EV penetration ratio, India is very similar to Japan and Korea, barring the fact that the other two are mature economies, while India is still developing," he said, adding that he expects EVs to catch on first in the premium segment, before becoming popular with the masses.

Meanwhile, Volvo Cars has not taken a call on introducing plug-in hybrids — which are well represented in the company’s global portfolio — in India. They often work well in price-sensitive markets as they are considerably cheaper than fully electric cars, because of the smaller battery.

Persson said he is not entirely opposed to the idea of using PHEVs, which come with a rechargeable battery as well as a petrol or diesel engine, as a stepping stone towards full electrification.

“We do believe that for some consumers, PHEVs could be stepping stones towards full electrification. While we do have the products in our global portfolio, it is something that we are currently evaluating for the Indian market,” he said, adding that the company will take a call keeping in mind all factors, including taxes on hybrids.

Meanwhile, after the initial spurt, the growth of EVs has moderated in several western markets such as the US, which saw the share of EVs fall to 7.3% of total auto sales for the first quarter of 2024. Still, the 2.69 lakh EVs US customers bought during the first three months of 2024 represented a 2.5% growth over the year-ago period. In India too, the initial euphoria has worn off, as sales growth has moderated.

Market leader Tata Motors recently slashed the projected contribution of EVs to its sales in 2030 to 30% from 50%. Persson, however, is undaunted, attributing the change in pace to the moderation that follows the initial hype in any emerging technology.

“While there is a bit of plateauing in EV sales, it is not like it is going backwards. In fact, in many markets, it continues to grow significantly, but not quite like the pitch as before. And this is something that we always expected,” he pointed out.

“We expected the EV sales to follow an S curve — a very strong adoption rate in the beginning by virtue of the early adopters, followed by a slower growth rate, and then taking off again. We expect that this pattern will look similar in almost every market,” he said.

This feature was first published in Autocar Professional's July 15, 2024 issue.