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Scania AB (SCV-A.SK) plans to produce about 2,000 heavy trucks as well as 1,000 inter-city buses each year at its first factory in India, the Swedish company said Tuesday.
Scania, majority owned by Germany"s Volkswagen AG (VOW.XE), has invested 2.5 billion rupees ($40.7 million) to build the factory at Narasapura in the southern Karnataka state.
The factory would have more than 800 workers over the next five years, the company said. It didn"t say how many people the factory currently employs.
Scania assembles its trucks and buses from completely-knocked-down kits. The company procures up to 18% of the parts for trucks and 100% of bus bodies from Indian suppliers, it said.
Assembling trucks and buses in India would allow Scania to sell its vehicles at prices that are competitive to those of Volvo AB, Daimler AG"s Mercedes Benz, MAN AG, Tata Motors Ltd. and Ashok Leyland Ltd.
Scania has been importing and selling heavy trucks for the mining and construction sector in India since 2007 through a partnership with Indian engineering company Larsen & Toubro Ltd. (500510.BY). In 2011, the company set up its own unit, Scania Commercial Vehicles India Pvt. Ltd.
Martin Lundstedt, president and chief executive of Scania, said the Narasapura plant is the company"s "largest industrial footprint in Asia so far."
The factory would have two manufacturing units--one each for truck assembly and buses. Scania began truck production at the new facility in June, followed by trial production for mining and off-road trucks. The company expects to soon start production of on-road trucks and roll out the first bus from the facility in the first quarter of 2014.