When Sweden’s truck-and-bus manufacturer Scania launches three of its bus models at the Bus World expo in Mumbai today, it will join other global players that are seeking to cross swords with the likes of Volvo, Mercedes and Tata Motors in the bus segment in India.
Companies such as Zhontong and Yaxing Motor of China are entering the Indian market in a variety of ways. According to the Society of Indian Automobile Manufacturers, sales in the bus market grew just 0.2% on-year to 33,810 units in the April-December period.
But expectations of growth in the market for luxury coaches – each unit costs `75 lakh or more – are spurring global players to foray into India.
For instance, Scania has set itself a sales target of 1,000 units per year for the next five years. Should it meet its target, it would emerge as a serious competitor to Mercedes and Volvo in India.
Scania is investing Rs250 crore in a factory near Bangalore for assembling trucks and buses. The plant will be operational in 2014, and will have a capacity to make 3,000 units, including 1,000 buses, initially.
Current demand for luxury coaches is around 1,000 units annually; but, it is expected to grow to 5,000 units in the next five years.
To exploit such demand, the Chinese majora are debuting through Deccan Auto Limited (DAL), a company floated by non-resident Indians based in Africa. Both Zhontong and Yaxing will supply technology to DAL.
DAL is investing Rs250 crore in a factory near Hyderabad, and will launch four models late this year or early next year. The plant is nearing completion, and will have an annual capacity of 3,000 units. Trial production is expected to start in April.
“The market has different segments and is as big as Europe’s. But the population is much bigger than Europe’s. So, as the infrastructure develops, there is a huge potential ahead,” said Anders Grundstromer, MD of Scania India.