Bus code lands bodyblow on body makers

As bus manufacturers gear up to adopt the Bus Code from April 1, the future of unorganised bus body manufacturers appears bleak.

As per the notification from Ministry of Road Transport and Highways, Code of Practice for Bus Body Design & Application (AIS 052) is to be implemented from April 2011. With introduction of this code, every bus manufacturing unit will have to obtain accreditation certificate to demonstrate its capabilities to build buses as per the safety standards set by Automotive Research Association of India (ARAI), the testing and certification agency.

The new standard has been in talks for four years now. Major original equipment manufacturers (OEMs) like Tata Motors, Ashok Leyland, Eicher Motors and Swaraj Mazda have all been gearing up to meet the requirements of the new standard.

“The new standard calls for a complete re-evaluation and re-work of the interior of buses. It involves certain fundamental changes at the design and development stage. Further, there are stringent tests that have to be undertaken, like the critical rollover test for which new facilities have to be created. This will call for significantly more investments and resources,” said R Seshasayee, managing director, Ashok Leyland.

The implementation of this standard will call for a significant amount of investment for bus manufacturers. Bus prices are expected to go up with the said implementation. “Considering the extent of change, OEMs will be faced with additional costs, all of which cannot be absorbed. Hence, those will reflect in an increase in prices of buses. The extent of this increase can only be ascertained once implementation commences,” said Seshasayee.

Tata Motors said it is in the process of incorporating the changes. “We have already made changes in existing models, except a few models. The changes will be done as and when the bus code gets implemented,” a Tata Motors spokesperson said.

As per the specifications, not just the OEMs, but also the bus body manufacturers will have to adhere to new standards.

Generally, the OEMs sell their products in the form of drive-away chassis and the body design and building is being done by body builders.

Most major OEMs like Tata Motors, Ashok Leyland and Eicher have in-house capabilities for body manufacturing or outsource to organised players like JCBL, Ruby Bus developers etc. Meeting the new specifications is unlikely to pose much difficulty for these organised players.

“We have been constantly working on meeting the standards under the Bus Code. We have already got some models approved from ARAI. We have also invested in designing quality products and getting the certification done. We have spent around `50 lakh per model. Due to the cost factor, we have shrunk the models as per the ARAI norms,” said Rishi Aggarwal, general manager, JCBL, which develops buses for companies like Ashok Leyland, Tata Motors, Swaraj Mazda and Eicher.

However, almost 70% of the bus body manufacturers belong to the unorganised sector. “There are around 2,000 players in the unorganised sector. Bus body manufacturing is the only automobile segment in India which does not have to go through any design approvals. With the new standard in place, the unorganised players will have to get their designs approved from agencies like ARAI, which would call for huge investments. Hence, their survival is difficult, said Balaji Rao, director, Synergy Management Advisors, who has been actively working on the opportunities for the unorganised sector. “Post Bus Code, pressure on organised bus body manufacturers, currently utilising 60-70% of their existing capacities, will increase drastically,” said Rao.

Around 80% of the unorganised players are based in Tamil Nadu, Madhya Pradesh and Rajasthan. “Implementation of the new standard will mean a lot of money for them. For the survival of the unorganised players, it is critical for them to come together and build synergies, wherein they can pool in their investments and get their designs approved as per the standard. This will ensure the safety of buses running across the streets of India,” said Shrikant Marathe, director, ARAI.