Bengaluru: Swedish commerical vehicle (CV) maker Volvo Bus Corporation on Tuesday said that it will export ‘Made in India’ buses to developed markets in Europe, a move that will enhance prime minister Narendra Modi’s ‘Make in India’ campaign. The company plans to unveil the first such bus in Europe by the end of the year.
The company said that it will ship Completely Built Units (CBU) manufactured at its Hoskote (outskirts of Bengaluru) facility. The Euro VI compliant buses will be sold directly to customers and not through Volvo’s subsidiaries in the region, Håkan Agnevall, president, Volvo Buses said in Bengaluru.
The announcement comes at a time when automobile makers with manufacturing facilities in India are looking beyond South Asia, Africa and Latin American markets for exports.
According to Volvo Buses senior leadership, this would be the first time a CV maker will be exporting to Europe. Interestingly, this would also be the first time that Europe would be importing buses from a non-developed market, Volvo said.
The Asia Leverage Strategy of Volvo, started in 2011, is aimed to utilise its manufacturing presence in China and India to cater to global markets.
The company has been operating in India since 2001 and currently exports inter-city coaches and city buses to South Asian markets and South Africa.
Agnevall said that it will entering the inter-city commuter segment (around 100-300km) in Europe which has an estimated requirement of around 5,000 buses a year. The move to export from India to Europe will not impact any existing facility catering to the region as they adverse impact on its existing facilities catering to the region, Volvo said.
The company had, in 2011, announced a Rs.400-crore investment to ramp up its facilities in India, including the bus division. Volvo has around 1,000 chassis-in-house, proto shop, skill development centre, research and development, paint shops and warehouses among other facilities and around 1,000 strong workforce as part of its infrastructure in India.
There are close to 5,000 Volvo buses on Indian roads—around 3,500 are used for inter-city commute and over 1,500 as city buses. Buses in India are currently Bharat III compliant (equivalent to Euro III).
Volvo’s competitors in the Premium CV space like Scania and Mercedes-Benz have also started exports from its India facilities in Narasapura (Karnataka) and Oragadam (Tamil Nadu) facilities, respectively, but not to developed markets.
Akash Passey, senior vice-president-business region international, said the manufacturing facility here would balance domestic and export demand based on requirement.
Volvo has ramped up its capacity to produce 1,500 buses a year on single shift. However, due to sluggish demand in the domestic market the company has been averaging around 500-700 units in the last couple of years.
On a query as to whether customers would be apprehensive about CV’s made in India buses, Passey said the customers have visited its local facilities and the feedback has been very positive. However, Volvo faces stiff competition in the inter-city segment in Europe where other established players such as Daimler and IVECO claim significant market share.
Calling the move by Volvo a ‘master stroke’, Kaushik Madhavan, head of automotive and transportation Practice at analyst firm Frost & Sullivan said the company will have first-mover advantage as it will master the technology before India adapts to higher stages of Bharat V and VI.
He said the move will ensure that the company will have a huge head-start with subsequent Bharat stage compliance before any other bus maker in India. “The idea behind leverage manufacturing in India is that the cost is cheaper, which is a fairly understood strategy,” he said.
Though Scania and Mercedes have announced plans to export to regional markets, Volvo’s long presence in India has given the firm the advantage to consolidate its position in India as well as focus on exports to mature markets.