There were news prevailing for quite sometime, that Scania is shutting down operations and is wrapping up the bus business. The news also spread quickly after news articles got published in few daily and set a sense of panic situation among Customers, who were worried about the resale value of their Scania fleet. Taking stock on the current situation, here is our take and understanding.
Recap : Scania opened up business in India for manufacturing and sale of premium trucks and coaches. The plant was opened on March 31 st 2015 and the plan was to assemble the chassis (truck and bus) and build bus body for India. New coach Metrolink was developed, and before the coaches were made in India, they were imported from Gemilang Coachwork, Malaysia. Even after starting bus body building, initial coaches were produced with supervision from Gemilang team.
Customers did give a better fuel performance rating and coach was delivering better than Volvo 9400 in some routes. But overall there were many claims from Customers on the quality of body building and higher spare parts price. Customer’s did have lot of teething issues and some perennial issues like windscreen crack, body panel cracks etc. Even with these issues, the company did had some brisk business and overall the Coach didn’t have major panic failures. Scania India was also quick in convincing many RTC’s across India, offering trails for the coach and started billing across India.
Market scenario and Scania’s strategy:
While Scania India confirmed that, they are not looking beyond Intercity coach market, the TIV for the segment wasn’t encouraging. The Numbers weren’t great and it never crossed more than 600 units in the last couple of years . Volvo was a leader by huge margin and Daimler was also selling their Super High Deck coaches, though in a very minimal volume. Along with the uninspiring volumes, the support from state Govt.’s were also poor in restructuring higher tax rates for operators. Hence overall, the climate wasn’t great, as in the Heydays during 2010-11, when the industry volumes were touching close to 1000 units.
So with dwindling volumes in Intercity segment and a very strong come back by Volvo in the BS IV versions, financially the overheads for bus plant had become too high. So inorder to offset the losses and to concentrate more on chassis, which obviously is the strong hold of Scania, the company decided to stop building bus body and chassis will still be produced.
Does this mean that Company is wrapping up its business? Definitely no. Scania has given lots of confidence to dealers and has only informed them, that they are undergoing changes. But we feel, Scania should look beyond the minuscule Intercity segment and work on other segments like mass volume front engine bus segment and premium city bus segments, which Daimler and Volvo are into.
Scania India will continue to make coach chassis and Customers will have a choice of building body from third party. This is an arrangement similar to MAN, where in they have preferred body builders to build bus body on MAN chassis. Similarly Scania will have a list of preferred body builders and MG Group, Belgaum, will be first among them. We also understand the first Coach built by MG Group is ready and will be showcased in Bus World, Bengaluru, that is scheduled to happen during August this year.
So looking forward, we will have a more of chassis sale from Scania India and dealers will work towards strengthening the brand and after sales support, as earlier. We only wish, the Intercity Volume grows in coming days and shall bring better profits to Scania and existing fleet owners.