Volvo Buses India is a 70:30 joint venture between Swedens Volvo Bus Corporation and Indias Jaico Automobiles.
Reduction in excise duty and the Centres assistance to states under the JNNURM for purchase of buses has resulted in demand for 12,000 to 15,000 buses. Out of this, low floor buses constitutes about 800 to 1,000 units and Volvo is eyeing over 50% market share in the low floor bus segment with 300-350 units, says Akash Passey, managing director, Volvo Buses India, adding that another 250-300 coaches would be sold, taking the total sales of the company to 550-600 units.
Volvo Buses India, which started its manufacturing plant in the country in January 2008, sold 200 units in 2007 and 440 units in 2008. It is directly competing with Tata Motors and Ashok Leyland to get a bigger market share in the segment.
The company is planning to extend its presence beyond Bangalore, Mysore, Chennai and Pune to 10-12 cities across the country with its low-floor buses and coaches this year and according to Passey, orders have already been booked for 2009. Sales of coaches shoot up in May-June and August-September and during this time the company slows down the production of buses. However, there has been a great demand from institutional customers (state bodies) and we hope to utilise the full capacity of 1,000 buses a year in a single shift at our Bangalore plant by 2010, says Passey, adding that the company is currently using around 50% of its installed capacity.
According to Passey, the government needs to continue with the lower excise duty on commercial vehicles and extend the provision under JNNURM to further boost demand of commercial vehicles in the country. The Centre has certainly done a good job through the last two stimulus packages but there is a greater need of reduction in tax liability on the public transport system in the upcoming Budget, he says.
As per the Society of Indian Automobile Manufacturers, commercial vehicle sales declined by 14.78% in May at 30,800 units as compared to 36,141 units during the same month last year.