Sweden’s Volvo AB, the world’s number two truck-maker, said it will invest Rs. 2,000 crore in India over an unspecified period, as it seeks to establish a stronger footprint in Asia’s third-largest economy.
This is in addition to the Rs. 1,800-crore investment the Gothenburg-based auto giant plans to make through its joint venture with India’s Eicher Motors Ltd—VE Commercial Vehicles Ltd, according to Olof Persson, CEO of Volvo Group.
The VECV investment, which will be through internal accruals, will be used for product development, creating a new test facility and setting up a new engine plant among other things.
Volvo and Eicher Motors hold an equal stake in the four-year-old joint venture that sells Volvo and Eicher-branded trucks and buses.
There are also plans to increase capacity at its engine plant situated in Pithampur, Madhya Pradesh. A top executive working with VECV had earlier said the plant would serve as a hub for the European market.
Dominated by domestic players like Tata Motors and Ashok Leyland, India’s buoyant truck market is seen as one of the most lucrative by global automakers, including Volvo, Germany’s Daimler and Sweden’s Scania.
The decision to up its spending in India comes soon after Volvo reported disappointing third quarter results in October. Orders and demand for trucks continue to plunge in Europe and the United States, hurt by the ongoing European debt crisis, and a stuttering US economic recovery.
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