Volvo had announced that it looks forward to expanding its operations in India. It has set its foot forward in the same directions and plans to enter the passenger car market in the country. It has already set a strong foothold in the commercial vehicle market in India and now plans to set up a new car plant. It will set up a new assembly unit in the country in next 18 months.

Currently, Volvo cars are being imported as completely built units or CBUS's which attract a hefty 112 percent import duty on CBUs. The new assembly plant will enable it to lower its passenger car prices in a price sensitive car market like India. Volvo is also witnessing a rise in demand for its passenger cars but the inquiries often do not convert into sales due to highly priced models that attract import duty.

Setting up an assembly plant in India will enable the company to bring its car prices by as much as 30 percent. Thus, car falling in the price range of Rs. 40 lakh or more will cost less by few lakh rupees. Volvo plans to become a serious player in the luxury car segment in India and expects to double its market share by 2009. It has recently launched its XC90 and S80 luxury sedans in Gujarat.