Shrinking – 12m Premium coach segment

Volvo 9400Volvo 9400

Volvo – The Catalyst

Premium coach, as a segment came into existence only after Volvo entered India. Until then it was a front engine dominated market. We didn’t even had a wide choice of engine driven AC coaches. What was available was only a sliding window, slave engine operated AC buses, which were mediocre in performance.

The first premium 12m coach was Volvo B7R and was launched in 2001 based on TX Platform. TX platform marked total renewal of the Volvo Buses product range that were in existence over the years.  Globally the first coach produced from TX platform was 9700 Intercity and Tourist coaches. The average horse power of buses when Volvo was launched B7R in India were at 130hp against Volvo’s 270hp. Volvo introduced several new concepts and technologies like the Electronically Controlled Suspension (ECS), Electronically Controlled Brakes (EBS), Volvo Engine Management System (EMS), Anti-lock Braking System (ABS), Kneeling Mechanisms  etc.

When B7R was launched in India, it was priced at around INR 45lks. It was almost like 4 to 6 times the sale price of a bus that could be built on Ashok Leyland or a Tata chassis. Turn around time was the first prominent difference Volvo made a clear distinction compared to others. Other than time, utmost comfort, premium interiors, noiseless saloon were something way beyond we have seen in a road going vehicle.

Even with many differentiating features, tt took nearly 2 years for Volvo to convince major operators due to higher price. After the successful operation of Sharma transports, Bengaluru, many operators like Neeta Travels, Mumbai, started investing in Volvo primarily for long distance Intercity routes, say Mumbai to Bengaluru, and premium routes like Hyderabad – Bengaluru, Pune – Mumbai etc.

Volvo 9400

Volvo 9400

Mercedes Benz also started Indian operation from 2010 with both 12m O500 RS 1830, and 13.7m O500 RSD 2436 coach. Operators like Eagle Travels Ahmedabad, Mann Tours New Delhi were few of many opted for single axle coach in addition to southern players like Sharma Transports. Though there  were takers for single axle coach, the market was slowly shifting towards multi axle coach in 2009 – 2011

Entry of Isuzu

Though Volvo and Mercedes had single axle coaches, sales in single axle coach started to increase drastically when Isuzu entered with LT134 range. Isuzu initially came with 11m but immediately increased the length to 12m after customer feedback. Priced at around 55 lks, power was modest at 240hp neither high or low and was a preferred in value segment.

Isuzu LT134

Isuzu LT134

Soon many smaller operators like Conti Coimbatore,  Padikkal Travels Thrissur started opting for Isuzu for distance upto 500 kms. Biggest breakthrough for Isuzu was with VRL, and they purchased 20 nos in one shot. Isuzu also was aggressive in marketing and started offering sleeper variants and was picked by APSRTC and branded them as Vennela.

But with so much efforts put by Isuzu, the sales was coming down year on year, and the sale was towards multi axle coaches. Partly the reason was durability of Isuzu was way lesser and had met with frequent breakdowns and now the sales is almost nil.

Volvo’s strike back with Asia Bus

Inorder to revive the single axle coach and to strengthen its portfolio, in 2013 Volvo launched a India specific model, internally called as Asia Bus and marketed it as 9100. This was seen as a very good move and was considered to be an entry barrier for other players like Ashok Leyland and Tata. Volvo has a strong brand recall as premium product, and what if the same product was available at 70 lks ( By now the B7R 9400 was retailing at around 85 lks)? This was a single liner, promotion for 9100.

Volvo 9100

Volvo 9100

Of course there was cost cutting measures seen in a larger manner, like removal auto adjusting mirrors, reducing length of coach to around 11m, chinese sourced gear box, commonised side glasses, etc.

But the response for the product from the market was kind of moderate and was neither hot nor cold. KTC Tours, Kerala, Parshwanath Travels, Gujarat were one of early Customers for 9100. No major bulk sales happened except with SRM Transports, Chennai. SRM branded them as “Common Mans Chariot” and ran them in Tier2 routes, which was the ideal and suggested application. Most of the sales were towards retail only, which means a set of 2 or 4 and not more than that. It didn’t even touched the sales figures of Multi axle range which was sold at around INR 1 Cr at that time and product sales started to fall quickly.

In short when Volvo launched its Multi axle range in 2008, the market responded very positively and started to cannibalise the sales of lower priced single axle coaches. Primary reasons for major shift towards multi axle in a shorted period was

1.Overall better operating economics for an operator.

2.Quicker and better returns due the higher ticket fare.

3.Higher brand value and better comfort perceived by passengers

For an operator the return on investment was much quicker and hence many shifted to multi axle coaches. Soon from 2010, it became a norm for any operator to have a multi axle in his fleet to run efficiently.

STU Purchase and Tourist application

During this period, STU’s were completely in favor of 12m coaches as they were priced attractive compared to multi axle and also had good occupancy. Also in the private sector, 12m coaches were getting popular in the tourist application in the north. But soon the “better operating economics” bug hit the STU’s and left the products to be sold mostly to tourist application only. Now from around 2014 onwards, major private tourist operators like Panickar Travels, Southern Travels, Mann Tours in Delhi have also shifted towards Multi axle.

Scania Metro Link HPTC

Now in 2014 and after, the preference for 12m premium coaches was only with STU and tourist markets like Kerala, leaving the TIV volume to less than 150 nos per annum.

Even when Scania started in Indian operations, Scania witnessed sale of only multi axle products and have sold very few 12m coaches. In Kerala, Scania have already sold few multi axle coaches to tourist operators, which was strong single axle segment, and the trend may continue as per the our understanding. Kerala, unlike rest of India have lot of high ranges with sharp hair pin bends. Scania multi axle buses easily negotiated them with steerable tag axles.

Verdict

Considering many of the stated factors, the segment is stagnant for more than few years and may continue to be the same for coming days. A strong verdict, with the way things are progressing is, the segment will be dormant and may be limited to STU’s in near future. The trend will change and will shift in favor of single axle coaches, if the product price is way attractive and will have better and quicker RoI. But as per our resources, the soon to be launched Volvo B8R 9400 single axle 12m coach will itself be priced close to 90lks.

Does that mean its end of road for single axle coaches in India? Not necessarily. We still have a strong  volume for premium coaches unearthed in terms of Tier2 and Tier3 routes and even in Tourist segment. This volume is still catered by value front engine products  like Ashok Leyland 12M, Tata LPO 1618. Tata came with its versions of its rear engine models like Hispano, Divo, but everything was a half hearten approach. The space for products like Ashok Leyland 12M RE / Luxura is still vacant. Ashok Leyland made a strong come back in rear engine intercity products like 12M RE, but its unfortunate that Ashok Leyland is not serious about this product and isn’t taking it further.

Ashok Leyland 12M RE

Ashok Leyland 12M RE

So we could clearly say, that until we see a strong price correction, and we get a right product with proven reliability, this segment will continue to be dormant . Let’s wait!