Auto giant Volvo Group on Wednesday announced a joint venture with S. M. Kannapa Automobile Private Limited to produce a range of UD buses in the value segment.

The Swedish auto manufacturer said it would invest Rs 125 crore and hold a 15 per cent stake in the joint venture.

The twelve-metre-long UD buses will be manufactured at a new facility situated between Hosakote and Kolar. The manufacturing facility will commence operation later this year, and the first batch of buses is expected to be rolled out of the facility by the end of this year.

The facility will have an initial capacity of around 500 buses per year. Eventually, it would be scaled up to 2,000-2,500 buses per annum.

Akash Passey, senior VP of Asian bus business at Volvo, said that the Swedish company would be responsible for supplying technology, design, brand as well as chassis to the joint venture.

Speaking to media persons, he said, "Volvo will supply technology, design, brand and chassis to the joint venture. The local content would be 40 to 45 per cent, which would be scaled up to 80 per cent in a few years."

Mr. Passey added that the Rs 125-crore investment was a part of the company's overall Rs 400 crore that the company planned to invest in India.

The Swedish company had acquired the Japanese company UD buses, which was previously called Nissan Diesel, in 2007, but poor sales forced it to stop production of these buses in 2010.