The Indian unit of Swedish carmaker Volvo will assemble all its vehicles in India starting next year, in line with the government’s ‘Make-in-India’ initiative to expand its presence in the luxury car market in the country.

“Our sales this year will be lower than 2019. But we expect to continue to gain market share,” Volvo Car India managing director Charles Frump told ET. “Next year onwards we will assemble all our models locally, be in a good position.” Frump said the move to locally assemble all vehicles it sells in the country will entail additional investment but he did not share the specifics.

At present, Volvo Car India assembles three models – SUVs XC60 and XC90, and sedan S90 – locally at its facility near Bengaluru, Karnataka.

Frump said the company has witnessed a steady revival in sales post the Covid-induced lockdown and expects demand to return to normal during the festive period later this year.

“In May, we were operating at 25% capacity, which increased to 50% in June. We were short only by seven units in July. Customer demand too has improved. The momentum in August is good, we are trying to weigh how much of this is pent-up demand versus actual demand,” Frump said. While Volvo is facing some short-term challenges following the Covid pandemic, there is no change in the company’s long-term strategy to develop the market in India.