News: Volvo eyes bigger share of Indian bus market

(RTR 07/02/2007) New Delhi - Swedish truck and bus maker Volvo is looking to increase its share of the Indian market when its local joint venture begins rolling out bus bodies, a senior company official said on Wednesday. Volvo, the world's number two truck maker, owns 70 per cent in a venture with Bangalore-based Jaico Automobile Engineering to make 1,000 bus bodies a year for India.

Volvo, which is investing a little over $ 6 million in the venture, has also said it would consider exporting to other Volvo markets in Africa, the Middle East and south east Asia.

Its main focus, though, would be the $ 5-billion Indian bus and truck market, the world's fifth-largest, dominated by local firms Tata Motors Ltd. and Ashok Leyland.

"If you look at China, there are some 30 players, whereas in India there are only two big players, and a few others," Peter Danielsson, a senior specialist of Volvo's bus rapid transit unit, told Reuters on the sidelines of an automotive conference.

Volvo leads the small but rapidly growing market for luxury coaches in India and has also entered the city bus segment.

The market for city buses is estimated at about 10,000 units a year and expected to rise as domestic travel expands.

"We see great potential for bus rapid transit in India because of rapid urbanisation and because it is the only choice for the poor," Danielsson said.

"At the same time, with improving highways, we find that people are willing to pay a premium for better quality," he said, referring to its luxury express coaches that have become a generic in inter-city transport.

Volvo last year raised its stake in Nissan Diesel Motor Co. to 46.5 per cent from 33.5 per cent, a move that also gave it a link to China through Nissan Diesel's local joint venture, Dongfeng Motor Corp.

Volvo has also been reported by local Indian newspapers to be in talks to acquire a stake in Ashok Leyland.

Danielsson declined comment on Volvo's interest in Indian truck makers, but said the company was keen to "localise" components in order to be more competitive locally.

"We have examples in China where we have done that, and India is a large enough market for us to do that," he said.

Volvo, which has been in India since 1998, exported truck components worth more than 70 million euros ($ 90.9 million) in 2006.

Faced with maturing markets at home, truckmakers in Europe and the United States have been seeking growth in Asia.

Germany's MAN AG has a joint venture with Force Motors Ltd. to make trucks and buses in India, and Navistar International Corp. will make commercial vehicles with India's Mahindra & Mahindra Ltd. from 2007.