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Business opportunity: Volvo plans corporate route for used buses

Business opportunity: Volvo plans corporate route for used buses
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First Published: Mon, Aug 04 2008. 11 32 PM IST
Updated: Mon, Aug 04 2008. 11 32 PM IST
Mumbai: Volvo Bus Body Technologies India Pvt. Ltd, a joint venture between Volvo Bus Corp. of Sweden and Jaico Automobiles Engineering Pvt. Ltd, plans to offer used buses to firms to ferry their employees, expanding its business of inter-city and long-distance transport.
The bus maker, which carries around 600 of its own workers to and from its factory near Bangalore by Volvo buses, is in talks with some firms in the southern tech hub and other cities. It didn’t disclose the names of the companies.
“We have a population of close to 1,800 buses on roads, some of them have been around for several years. It’s these old buses that would be used by the corporates to ferry employees,” said Volvo Bus India managing director Akash Passey. He said huge potential exists for deploying used Volvo buses to transport company employees.
Companies such as Infosys Technologies Ltd, India’s second largest software services firm by revenue, both lease and ply their own buses to transport employees. Infosys runs a 245-strong fleet of buses in Bangalore alone, and nearly 260 elsewhere in the country to transport employees between their place of work and residence. Business process outsourcing firms, too, use hundreds of cabs to ferry employees to and from workplaces.
Offering brand new buses to firms would not be a financially viable option because the distance travelled will not be more than 100km on an average in a day, Passey said.
“An average office commuter spends close to 3.5-4 hours in travelling to and fro,” he said. “Volvo buses, which are going to be basic, without air conditioning, shall be able to offer a comfortable yet cost-effective solution to these people.”
A Volvo India spokesman said the firm would initially act “as a facilitator” between bus operators that want to sell their used vehicles and firms interested in buying them. Later, it may buy back Volvo buses from bus operators directly and resell them to buyers.
As roads in the country’s cities get more traffic-clogged, commuting times have increased. In Mumbai, for instance, it takes about two hours to reach downtown Nariman Point from the suburb of Powai, a distance of about 35km, using a local train and an auto rickshaw.
Public transport experts say the success of the Volvo plan would depend on the condition and maintenance of the buses.
“It’s undoubtedly a very positive step by the company and would incentivize people to use buses over private vehicles (and), thereby, help de-congesting roads,” said Balraj Bhanot, a former director of the Automotive Research Association of India. “However, its success will depend on the number of kilometres (the bus) has done, the way it has been reconditioned and how it’s being maintained,”
Volvo Bus Body Technologies, a 70:30 joint venture between Volvo and Delhi-based Jaico Automobiles, is setting up a facility at Hoskote near Bangalore to manufacture buses. The plant, to be operational by the year-end, will have the capacity to make 1,000 bus shells annually. There are also plans, Passey said, to have the new plant cater to markets in West Asia and Africa. By 2010, exports would account for 25-30% of business volumes at the unit.
Volvo Bus plans to sell 450 buses in India this year against 200 in 2007. The Swedish manufacturer also has a factory in Bangalore that assembles around 1,000 trucks a year.
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First Published: Mon, Aug 04 2008. 11 32 PM IST
More Topics: Volvo | Auto | Bus | Resale value | Corporate News |