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Volvo targets city bus market to drive sales

Volvo targets city bus market to drive sales
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First Published: Thu, May 20 2010. 11 34 PM IST

rowth road: Akash Passey, managing director, Volvo Buses India.
rowth road: Akash Passey, managing director, Volvo Buses India.
Updated: Thu, May 20 2010. 11 34 PM IST
New Delhi: The Indian subsidiary of AB Volvo is aggressively expanding its reach in the market for city buses, having carved out a niche in the long-distance segment.
The company, which now has low-floor air-conditioned buses running in 10 cities, up from three the year earlier, is also planning to showcase hybrid vehicles to city governments across India.
“We expect repeat orders for the city buses to come in next year,” said Akash Passey, managing director, Volvo Buses India. At Rs80 lakh, Volvo’s low floor buses sell at a price that is 20-30% higher than the competition.
rowth road: Akash Passey, managing director, Volvo Buses India.
A backlog at Tata Motors Ltd. and Ashok Leyland Ltd has led city governments to place some orders with Volvo under the Jawaharlal Nehru National Urban Renewal Mission Scheme. As a result, the company has gained entry into markets such as Kolkata, Thiruvananthapuram, Faridabad, Mysore, Pune and Navi Mumbai.
With 600 buses running in these cities, it has a 52% share of the low-floor air-conditioned bus market. Volvo does not make buses without air conditioning.
Volvo says the lifespan of the buses has been the main growth driver. Passey expects the buses to last 12-15 years on average compared with three-six years for the competition.
Additionally, it is also taking on maintenance contracts to ensure that downtime is restricted to no more than a day a month.
“These buses are being bought to showcase that Indian cities are modern. It’s more for an image makeover,” said V.G. Ramakrishnan, senior director, automotive practice, Frost and Sullivan, a consultancy. “So it won’t be hard for these companies to get repeat orders.”
According to the company, 60% of people who ride these buses in Bangalore have shifted from cars and two-wheelers.
The city bus orders helped Volvo tide over the decline in bookings from fleet operators during the slowdown. In 2009, the company sold 550 buses, of which 70% were sold to city governments.
With the fleet operator market rebounding strongly, this year’s target has been raised to 600 units.
After adding CNG buses to its fleet in January, Volvo is looking to win contracts in the lucrative New Delhi and Mumbai markets. “We’re in touch with the Delhi government and will shift focus to Mumbai,” said Passey.
The made-for-India CNG versions come with special safety features in the engine area to prevent fires. Volvo’s first CNG buses ran around 40 years ago in Europe.
samar.s@livemint.com
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First Published: Thu, May 20 2010. 11 34 PM IST