Mercedes-Benz India is looking at a growth rate of 20% in its bus business this year. The company has seen a slow start with total sales of 67 units till date since 2008 when it entered with a two-axle coach bus. The company hopes to boost its business as it enters the city bus segment in 2011. In an interview to FE?s Shweta Bhanot, Wilfried Aulbur, managing director and chief executive officer, Mercedes-Benz India Pvt Ltd, shared his views about the company?s plans to bring down costs through enhanced localisation and at the same time maintaining the brand promise of high quality and reliability. Excerpts:

How do you justify a volume of 67 buses since your entry into the segment in 2008?

We had a terrible 2009. Our focus on two-axle buses for private operators was badly impacted by the recession, wherein operators were not keen on making new purchases in an environment of unavailability of finance, and later swine flu. Their occupancy levels were significantly low. We sold only nine units that year. Things look good now and we have sold 43 buses in the first five months of the year. Of that, 30 are two-axle buses and the remaining are three-axle ones. At present, there is a backlog of around1 10-15 three-axle buses.

How do you plan to boost volumes and what is the current volume of production?

We are making seven to ten buses per month at the Chakan plant. We are ramping up production to meet the demand. We have a strong order book from state transport units (STUs). The launch of city buses in 2011 will further boost our volumes. We will soon be putting prototypes of our city buses to test in Rajasthan, Karnataka, Haryana and Maharashtra. These STUs will test the buses for six months.

What are your plans for localisation in a bid to bring down costs?

We will be looking at full localisation of the bus body; and depending on the volumes, localisation of the chassis will be considered. A commercial vehicle owner looks at the total cost of ownership. While the initial cost is high, the maintenance cost of our buses is low. We will soon start producing bus body in-house with our Egyptian partner MCV. This will be for city buses. Later, we may look at coaches as well. We will also look at synergies in terms of suppliers and other leverages arising out of our parent?s plant in Chennai (Daimler AG). All this will help us reduce costs. The in-house bus body building will help cut cost by Rs 1 lakh spent on transportation currently.

Will you continue with your tie-up with Sutlej Buses and what kind of cost advantage will you get once you make the bus body in Chakan?

We will continue with Sutlej, which is currently doing the coach bus body building for us and later may look at city bus body building as well. We want not confine ourselves to just one partner and will look at more partners as and when volumes grow. We have two partners at present, which we feel is enough for the current volumes.

What will be the capacity of the bus body building facility at Chakan and what will be the investment?

We are still finalising the details. The investment in Chakan will be a part of Rs 300-crore investment package for India. The city bus body building will start in another nine months.

How are the Actros trucks doing?

We had delivery problems during the end of the previous year. There was a shortage of finished goods and we somehow pulled it up. There were only 12 kits. We have sold 104 Actros so far. We are doing on an average 25 units a month. Things have improved since then.