Volvo, the manufacturer of premium buses, announced the launch of buses in the “value” segment on Wednesday. Haken Agnevall, President, Volvo Bus Corporation, said the new range of buses, going under the UD Buses brand name, would be available in the country by the end of the year.
The buses would be produced at a new facility in Karnataka, “somewhere between Hoskote and Kolar,” said Akash Passey, Senior Vice President, not wishing to disclose the exact location of the plant. The bus assembly and the body building works are to be executed by a joint venture company in which Volvo will partner S.M. Kannappa Automobiles Pvt. Ltd (SMK), part of the Prakash Roadines Group.
“We will hold a 15 per cent stake in the joint venture and plan to invest about Rs. 120 crores in this ecosystem over the next 2-3 years,” Mr. Passey said. He clarified that this is inclusive of Volvo’s equity stake in the venture, but refused to give a detailed break-up of the planned investment in the venture. Overall, the Volvo Group plans to invest about Rs. 400 crores in India during this period, he added.
Volvo, Mr. Passey said, would provide the new venture technical support, the designs, lend the brand and also supply the chasses, Mr. Passey said. “Initially, we plan to sell about 500 UD buses, mostly in the southern region, but plan to scale up to 2,000-2,500 buses in a few years,” he said. Volvo aims to occupy the space at the upper end of the ‘value’ segment, he added. “Our market share is likely to stabilise at about 25 per cent of the value segment,” Mr. Passey said. Volvo expects the size of the ‘value’ segment to about Rs. 20,000 crores by 2020.
Mr Passey termed the company’s foray into the value segment as “ a logical step,’ following its success in the premium bus segment. He said Volvo has a market share of more than 90 per cent in the Indian long distance bus segment and about 50-60 per cent of the premium city bus segment. The company expects its new buses to be especially popular in 56 Tier 2 cities in the country and among the state-owned corporations. More than 12,000 Volvo city buses run by such corporations ply in 13 Indian cities, Mr. Passey said.
Volvo acquired the UD brand from the Japanese company Nissan Diesel in 2007.
