Dedicated bus corridors within cities helping sales too.
Bangalore-based Volvo Buses India (VBI) is seeing strong demand from state transport undertakings (STUs) for its luxury buses, priced upwards of Rs 70 lakh each.
“About five years ago, sales contribution from STUs were nil. Now, 70 per cent of our business comes from state governments, who deploy our buses for public transportation both inside cities and for inter-state transportation,” says Akash Passey, managing director of VBI. The company is a joint venture between the Swedish-based Volvo Bus Corporation, which holds 70 per cent of the stake, and the Azad Group’s Jaico Automobiles, which holds the rest.
Of the 2,500 buses VBI has supplied in the domestic market since its inception in 2001, around 1,400 have gone to state governments. The government of Karnataka is the largest client, having placed orders for 510 buses. Currently, 370 buses are used by both the Karnataka State Road Transport Corporation and Bangalore Metropolitan Transport Corporation. STUs from Hyderabad, Mumbai and Chennai constitute the rest of Volvo’s governmental business.
The Association of State Road Transport Undertakings estimates the combined fleet size of all STUs at around 115,000 buses, that transport around 65 million people every day. Most of these buses, more than 95 per cent, are the ordinary, non-AC, noisy buses constructed on a truck chassis.
This category, dominated by Tata Motors and Ashok Leyland, cost between Rs 16 lakh and 22 lakh. The second category are the low-floor buses bought by cities like Delhi under the JNNURM project, which cost between Rs 25 lakh and 30 lakh each. The third tier is the super-luxury and quiet buses, of which Volvo is the sole supplier, that cost upward of Rs 70 lakh each. The sleeper coach that Volvo plans to introduce this year in the domestic market costs around Rs 1 crore.
Passey says he expects the super-luxury buses (city segment) to grow by 25–30 per cent, and the coach segment (inter-state) between 5 and 10 per cent annually for the next five years. The reasons for this robust growth from the public sector are many.
One, the creation of dedicated bus corridors in cities like Delhi, called Bus Rapid Transport System (BRTS), would mean more low-floor and luxury buses can travel at faster speeds, transporting greater numbers in greater comfort. The number of cities installing a BRTS is shortly expected to touch 10.
Two, road transportation experts say once BRTS across the country is operational, the number of private vehicle owners switching to public transportation would increase sharply.
Three, under projects like JNNURM, the aim of the government is to reduce traffic congestion caused by increased usage of private vehicles. Urban transportation experts say this objective would directly help bus manufacturers like Volvo.
Despite the success of the Volvo fleet in public transportation, there are dissatisfactions. Volvo’s largest client from the public sector, Bangalore’s BMTC, is not happy with the cost of running these buses. “Currently, we are making losses on the Volvo fleet and have to resort to cross-subsidisation from our services that use normal buses,” says a top official from BMTC, who requested anonymity.
The BMTC official further said since Volvo is in the enviable position of being sole manufacturer of such quality luxury buses, the prices they command are very high when compared to the closest substitute from a local bus manufacturer like Tata Motors. In addition, Volvo’s buses run only on diesel.
