Volvo Buses eyes next growth phase in India

As a bus brand, Volvo enjoys tremendous goodwill in India. Hakan Agnevall knows this only too well and is keen on taking the story to the next level. “India is one of our big markets and we have made investments for the long run,” the President of Volvo Buses said during a recent visit here.

As one of the fastest growing economies in the world, India has tremendous potential for the Swedish group. As demand for public transport continues to grow across cities, Volvo is only too aware that the sky is the limit for mobility solutions.

As Agnevall says, emerging markets need the “right offerings” and this puts in perspective the launch of its UD brand in the value segment last year. As Volvo has figured out, an attractive offering can still generate money even in price-conscious markets like India. This was the thinking behind the UD buses launch and the script is working well so far.

Yet, the bigger challenge is to optimise India’s manufacturing competencies and this is where Volvo’s Asia Leverage Strategy launched in early 2011 will play a big role. “It has taken us five years to get here and we now have a certain maturity level in terms of production systems and a supply base,” says Agnevall.

The Volvo group has a host of suppliers from India participating in global programmes. “Global sourcing is integral to the group and this is equally applicable for buses where we are developing our supplier network in India,” he adds. Volvo is already exporting buses from here to Asia-Pacific and South Africa with Europe being the latest addition starting 2016.

“As a global company, it is important to leverage our manufacturing and engineering footprint. We are addressing the intercity commuter segment in Europe (from India) where the Volvo brand is not so active at this point in time,” elaborates Agnevall.

While these buses will be shipped out from India to Europe, the move will not affect operations at Volvo’s Poland plant which will make products for other segments in Europe. The India initiative has been designed by engineers here jointly with counterparts in Europe as part of the effort to leverage competencies.

“When you design a product for Europe, you cannot sit in a silo in India or, likewise, sit in Europe to design a product for India. When we think of an engineering strategy, we use a global team where we have people from Europe and India,” says Agnevall.

The Volvo Buses chief believes India is at a “big transformation stage” and will play a substantial global role in the coming years. The group already has an alliance with Eicher Motors at Pithampur aimed at producing engines and trucks for the world. This manufacturing powerhouse will be tapped more aggressively in the future.

Electromobility is a subject close to Agnevall’s heart from the time Volvo made a “strategic evaluation” some years ago on future drivelines for trucks and buses. The top priorities in the e-mobility drive were to reduce carbon dioxide emissions as well as noise while keeping in mind that energy would be a scarce resource in the future. Eventually, the solutions also had to be financially viable.

“Our conclusion is that electromobility will be the future,” says Agnevall. Volvo first launched a hybrid bus in 2009-10 and has already sold over 5,000 units worldwide with energy savings of 30-40 per cent. This was followed by the electric hybrid last year and then the full electric bus in Gothenburg a couple of months ago.

It was clear that a full electric bus could have its share of infrastructure constraints while an electric hybrid is far more flexible.

Volvo also realised that a sustained mobility approach with any of these e-mobility options would need to factor in different stakeholders. “It is a transport solution and we have to prepare this jointly with cities through facts and figures to show how it can help,” says Agnevall. More importantly, the drive should make financial sense as these buses are expensive even while assuring long-term savings in operating costs.

Talks have begun with “several cities” in Europe and South America which have their own set of e-mobility requirements, especially when this also means factoring in BRT (bus rapid transit) systems in place.

These are still early days yet in India though policymakers acknowledge the importance of e-mobility solutions.

As Agnevall says, the three product offerings constitute the first pillar of the e-mobility strategy. The second is to provide a complete solution, especially charging infrastructure for electric hybrid and electric buses. This is where Volvo’s partnerships with ABB and Siemens are critical to making this work well.

On the subject of mobility, India’s involvement with BRT systems could attract greater interest from the group. For the moment, good working examples of these systems are perhaps confined to Gujarat, Karnataka and Madhya Pradesh. Volvo, which has been working on the Hubli-Dharwad corridor, is keen on growing its presence in the country’s BRT drive which could even include e-mobility in the long term.