Swedish automaker Volvo, which has carved out a niche for itself in the premium bus segment but didn’t do too well with its car brand, is now planning to focus on the luxury car market, and even toying with the idea of setting up local assembly operations.

Volvo Auto India, a wholly-owned subsidiary of Volvo Car Group owned by the Zhejiang Geely Holding Group of China, is preparing a longterm strategy for India to gain more volumes in the 30,000 units a year luxury car market.

“We are competing against stronger German rivals who have put up a huge distribution network that’s aided by local plants to roll out cars at lower taxes. But we have to import cars by paying higher taxes. So, it’ll make sense to assemble our cars locally to pass on the benefits to our customers and increase our share in the Indian market,” said Volvo Auto India MD Tomas Ernberg.

But the Swedish parent company is yet to clear any assembly facility in India and has not finalised any fresh investment plans so far. Tomas didn’t give any kind of time frame for selecting a location for the planned local assembly unit in India and said that headquarters would take a call in due course.

Volvo was among the first to enter India in 2006, much before many of its global rivals like BMW and Audi, but failed to capitalise on its first-mover advantage. It sold just 812 cars in 2012 while BMW sold 9,375 units and Audi, the last to enter India, sold an impressive 9,003 vehicles the same year, 63% sales growth over 2011.

Auto experts say that the Swedish car maker would continue to face challenges in the Indian market. “There’s stiff competition in the luxury car space. BMW leads the global luxury car market as well the India market. Same is the story with Audi and Mercedes Benz in the pecking order. Volvo has not gained in any markets or country so far and a resource-constrained company may not have an easy run in India either,” said a Delhi-based auto analyst working with an MNC consultancy.

It is believed that the changes in the global ownership may have somewhat upset its Indian growth plans: the ownership changed from Volvo AG to Ford Motor till the Chinese took over the enterprise in 2010.

Backed by an Asian management, Volvo now plans to revamp its car offerings and also add a new authentic brand experience for customers. “We are realigning our dealership network as well as introducing new products with smaller and fuel-efficient engines,” added Ernberg.

Currently, Volvo has seven showrooms in India and would open three more in Delhi, Bangalore and Gurgaon this year. It also plans to introduce the V40 Cross Country in the Indian market that’s expected to be priced close to the entry-level models from the German luxury carmakers.

The V40 Cross Country will be imported and deliveries of the car are likely to begin by May this year.