Auto makers hitch ultra luxury ride

The luxury bus market is catching the fancy of domestic auto majors. With the sales of luxury buses growing up by over 40 per cent every month, leading companies such as Ashok Leyland, Tatas, Firodias, Eicher Motors, Daimler, MAN-Force, Tatra Vectra and Asia Motor Works are jumping on to the bus bandwagon.

Improved highways, which can support these large luxury buses, and the tourism boom impelling tour operators to expand their bus fleet sizes to meet the new demand, are the key reasons for attracting players. Also many state transport corporations are replacing their old buses with some luxury coaches, especially in large cities. As a result, the 15,000-20,000 units a year luxury bus market is attracting more players.

Though the interest rates on auto loans have gone up, the booming tourism sector and non-dependence of the state transport corporation on loans from the banks to buy coaches, make this segment relatively insulated from rates hike.

"The outlook on the bus segment seems positive following encouraging response towards infrastructure from the government. Improved road connectivity and affordable travel rates have helped to boost the demand of luxury class buses in the country", said an analyst.

So, the Delhi-based Eicher Motors, manufacturing and selling commercial vehicles, tractors and two-wheelers, will roll out two different models based on separate platforms.

The first will be a conventional front-engine powered luxury bus, having front and rear suspension embedded technology. This will be launched before the end of the current financial year.

Its second launch will be on the lines of luxury buses such as the Volvo B7R and the Ashok Leyland Luxura. This model will have a rear engine configuration, which will help free up space for passenger comfort and luggage space. Both the front and rear engine models are currently under development.

Tatra Vectra, traditional makers of heavy trucks, will venture into the luxury bus making business with a local bus body manufacturer. The company will supply chassis from its Hosur facility in the next 12-18 months, which would be then used to host bus bodies.

Daimler, which makes luxury cars in the country, is already looking at a tie-up with a Indian or India-based commercial vehicle manufacturer for establishing its own range of commercial vehicles which will also include buses via local manufacturing. The company is already in the process of setting up its next plant in Pune. For the moment, the German giant will import buses as a measure to satisfy the initial surge in demand.

Other big majors are also coming in. Germany's second-largest commercial vehicle manufacturers MAN Group has tied the knot with Pune-based Force Motors, part of the Firodia Group, to make luxury coaches for India and other Asian markets. The joint venture entails an investment of about Rs 550 crore and by the next year it will produce chassis and complete buses for the entire Asian region.

The lure of the market has even attracted Ahmedabad-based Asia Motor Works (AMW), the latest entrant in the truck segment. Anirudh Bhuwalka, MD and CEO of AMW, said, "Our natural progression (from trucks) will be buses, however, we have not carved out detailed plans towards it for the moment."

Tata Motors has forged an alliance with the world's largest maker of fully built buses-Marcopolo. The venture will produce 7,000 fully built buses and luxury coaches annually in the facility, which is due to come up in 2008 in South Goa. This plant, as Tata Motors claims, will be the largest in the world.

The traditional luxury bus brand Volvo, which is also the most expensive in the market, also grew by 35 per cent selling 292 units in the first four months of the current financial year. And the company has entered into a joint venture with Jaico Automobiles to jointly manufacture buses from its plant in Bangalore.