Volvo Buses India expects bumpy ride

Volvo Buses India Pvt Limited (VBIPL), a part of Swedish maker of large buses and coaches, Volvo Bus Corporation, expects the current economic slowdown to affect the growth of the bus market in the country.

India’s bus market, which reported total sales of 33,000 units (12 tonne and above category) in 2007-08, is likely to shrink by 25 per cent in 2008-09. However, Volvo Buses India, which grew 2.25 times to record a sale of 450 buses in 2008 over 2007, does not see sales growing beyond 20 per cent this year.

Akash Passey, managing director, VBIPL, said the situation was turning bad to worse for bus as institutional and private finance is drying up for private bus operators, who account for majority of luxury bus sales in the country.

"In the last two years, we have registered good growth in India and with the commissioning of our own bus body building plant in Bangalore early 2008, we have more than doubled our sales in India. However, in the absence of loan facility and higher interest rates charged by banks for commercial vehicles, the overall bus market is likely to shrink by around 25 per cent in 2008-09. We expect to grow by a modest 20 per cent in 2009,” Passey said.

In 2007, Volvo sold 200 buses and 450 in 2008. It has started 2009 with a backlog order of 50 buses and a new order of 150 inter-city buses placed by existing customers from the public transport corporations. It has not won any new customer in 2009, he said.

“The sustainable business model that modern Volvo Buses offer its customers, allow us to remain positive even in a downturn,” Passey said.

To meet current orders as well as plan for emerging need for modern city buses, Volvo Buses will be ramping up production capacity by 25 per cent at its Bangalore plant.

The company invested Rs 100 crore in early 2008 to set up a bus body building plant with an instaled capacity of 1,000 buses.