Date:16/01/2006 URL: http://www.thehindubusinessline.com/2006/01/16/stories/2006011600500500.htm

Back Volvo mulls separate plant for buses

K. Giriprakash

New Delhi , Jan. 15

VOLVO is considering an option to build a separate plant for manufacturing buses in India and is willing to help State transport corporations in arranging finance for buying city buses.

The Volvo Bus Corporation President and Chief Executive Officer, Mr Hakan Karlsson, told Business Line that setting up a separate plant for making buses was one of the options being considered, though it may not happen if the company is able to expand the capacity at its plant near Bangalore. "We will first look at whether we can expand our existing capacity itself," Mr Karlsson said.

He said since the company expects to sell 1,000 buses in a few years, it was necessary to prepare itself to scale up the manufacturing capacity from now onwards. The current market size for large city buses is around 10,000; for inter-city coaches, it is around 5,000.

Mr Karlsson said Volvo is willing to arrange funding for State transport corporations for purchase of city buses. "We are willing to arrange for funding," he said.

He said India could be used to source components for buses elsewhere in the world. "We find that the quality of auto components is extremely good here and hence are willing to source from here for our other manufacturing plants," Mr Karlsson said.

He said Volvo Bus Corporation is willing to offer fleet management service as part of the package to State transport corporations. "We will offer fleet management service as well as training for drivers for lengthening the lifecycle of these buses," he said.

Mr Karlsson said once Volvo is able to sell around 1,000 buses, the localisation content in these buses will also go up to 60 per cent from 40 per cent.

Mr Karlsson said Volvo has bagged a total order of 50 intra-city buses from the Bangalore Metropolitan Transport Corporation. Each of these buses costs around Rs 60 lakh.

Volvo sold around 400 inter-city buses in 2005 and it expects to post a 25-30 per cent growth this year too. The bus operations contribute 25 per cent to the total revenues of Volvo in India.

Volvo India registered a 65-per cent growth in volume during 2005 compared with 2004, selling about 600 trucks of various types.