The Hindu Business Line : Cheaper air travel hits Volvo bus sales

Bangalore, July 17 The boom in domestic air travel and issues over body parts has hurt the sales of Volvo buses in India, as a result of which private operators scaled down orders for the hi-tech buses last year.

“Competition from low-cost airlines and a few issues in body building hurt our sales,” Mr Eric Leblanc, Managing Director of Volvo India, told Business Line.

Compared with 2005, sales fell 31 per cent to 203 units in 2006, though the company expects to come out of the trough soon.

Sales during the first six months have been normal but the company expects them to increase once the new plant starts operations later this year.

It expects to sell about 300 bus units during the calendar year.

Mr Leblanc said that the buses were built for better roads and some of them had developed problems because of the poor condition of roads in India. “We are now customising these buses to suit Indian road conditions,” he added.

Volvo, which launched its buses in India in 2001, has entered into a joint venture with Jaico Automobiles to manufacture buses near its truck manufacturing plant at Hoskote, near Bangalore.

It holds 70 per cent stake in the joint venture. The total cost of investment is around $12 million. It will manufacture 1,000 buses during the first 12 months, of which 500 will be exported.

In India, Volvo sells two types of buses: the B7R and the B7RLE. In 2005, it bagged its biggest order so far when the Mumbai-based Raj Travels, one of the leading travel agents in the country, placed an order for 100 B7Rs.

Its other major customers are the Karnataka State Road Transport Corporation and the Bangalore Metro Transport Corporation.

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