New Delhi: Taking advantage of lower labour costs and reduced overheads, Volvo AB’s India unit plans to start exporting buses to emerging markets.
“We’re looking at starting exports by the end of next year,” said Akash Passey, managing director of Volvo Buses India Pvt. Ltd. The company plans to tap markets in West Asia and Africa.
Volvo says that labour costs are usually 30-35% lower in India than in developed countries and this alone would allow it to price its buses competitively. Volvo already exports buses to India’s neighbours, Bangladesh and Sri Lanka, and has sent around 200 buses since it set up shop in India eight years ago.
At first, the firm plans to start exporting multi-axle buses and pack in 53 seats, eight more than buses usually have. The extra seats allow fleet operators to recover fuel costs on an inter-city journey.
Analysts say that this could be the start of commercial vehicle exports by foreign firms from India. “Companies like Volvo are looking at only the labour arbitrage. But the big story for India is in small (commercial) vehicles,” said Pankaj Chadha, director of the automotive practice at Ernst and Young, a consultancy. Buses and small commercial vehicles are similar, he said.
On Saturday, Ashok Leyland Ltd said it expects its light commercial vehicles, made in collaboration with Nissan Motor Co. Ltd, to be sent to both developing and developed countries. The firm’s heavy commercial vehicles would be sold only in markets in Africa, West Asia and Latin America. “We believe that the characteristics buyers want in light trucks are the same around the world and so our project with Nissan would have a substantial export component,” said R. Seshasayee, managing director, Ashok Leyland.