CV makers see little hope in bus order

Urban renewal mission’s order small relative to the production decline in last few months.

The plan to purchase around 15,000 buses for 63 cities under the second phase of the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), promoted by the Ministry of Urban Development, is ready and rolling. But commercial vehicle manufacturers, while agreeing that it will give some fillip to the industry, do not expect this alone to ensure reversion to the high production levels they clocked in early 2008.

Annual production capacity in the medium and heavy commercial vehicle (M&HCV) category is 2.3 lakh vehicles. Since production lines for both goods (trucks) and passenger (buses) categories are the same, the purchase of 15,000 buses is only 9 per cent of the total capacity. Between April 2008 and January 2009, both production capacity and domestic sales in this segment dropped around 30 per cent, so the increase in orders will not stem the entire decline, say industry sources.

Industry executives say while the shortlisting of bus manufacturers will have to be completed by March-end, production will commence immediately to help them deliver the buses before June 30. “The order will be an impetus and will be reflected in our production schedule from April onwards,” says Rajive Saharia, executive director (marketing), Ashok Leyland.

JNNURM’s order is pegged at about Rs 4,800 crore. Of this, 20 per cent buses will have to be low-floor ones, which cost Rs 50-60 lakh each, while the balance comprise semi-low floor and conventional buses, which cost about Rs 25 lakh each. The bus allocation for 43 cities has been announced.

This ambitious undertaking will be funded by a tripartite structure comprising the Centre, the states and the municipal bodies. The size of the central contribution depends on the population density of the recipient cities.

JNNURM's stipulation that winning bidders must deliver completely-built buses is bound to throw up challenges for manufacturers. “A majority of the industry’s production is calibrated to manufacturing conventional bus chassis. The requirement to deliver fully-built low-floor buses by June-end could throw up fresh challenges,” said an industry executive.

JNNURM’s bus project is an initiative by the central government to promote public transport. By deploying high-end low-floor buses in every major city in the coming months and creating dedicated corridors for these, the government hopes to reduce use of two-wheelers and cars, a key cause of congestion and pollution.

The plan includes raising the price of auto fuel and increasing the registration fee for private vehicle users to lower their consumption and to fund the bus project.