The bus unit of Volvo plans to build 450 buses this year at the facility that will open Thursday in this southern Indian city and increase production to 1,000 units by 2010, said Chief Executive Håkan Karlsson.
The company is mainly targeting the expanding Indian market where accelerating economic growth and rising middle-class incomes have stoked demand for luxury transport, but also plans to export part of the production to other Asian countries.
“Asian cities with growing populations and traffic density increasingly need cost-effective and modern public transport,” Karlsson said.
“With Asia’s commercial vehicle market growing exponentially, we see the joint venture playing a role in fuelling the company’s future growth across the region,” he said.
Volvo Bus, a division of Swedish vehicle maker AB Volvo, is joining manufacturers such as South Korea’s Hyundai Motor and Japan’s Suzuki in turning India into a low-cost export hub, using cheaper labour and local components.
The company is also seeking to tap demand for more comfortable city and inter-city travel in a country where the roads are becoming choked with cars, 1.4 million of which were sold last year.
Volvo Bus, which sold 200 coaches in India last year, set up the Bangalore manufacturing plant in a joint venture with local partner Jaico Automobiles.
The Swedish company has a 70 percent stake in the venture, which already has orders from local customers for half the targeted production this year, said Akash Passey, managing director of the joint venture.
The factory will roll out a new version of the Volvo 9400 inter-city bus in the first quarter of this financial year.
Volvo has sold 1,600 city and inter-city buses since 2001 to state tourism agencies and public and private transporters in India.
The Volvo group also manufactures trucks and construction equipment as well as aerospace components.