'Volvo’s localisation is not about driving costs here down. The larger aim is to establish India as a global sourcing point.'
VRV Sriprasad, MD, Volvo Buses India, spoke to Brian de Souza on the India journey and the Swedish CV maker’s bus-making philiosphy.
There is increasing competition in the luxury bus sector with the entry of new players. What does this mean for you?
Volvo has made buses for many years and we have had competition all over the world wherever we are. The fact is that we have this lead in India, having entered the market in 2001 but we always knew we’d have rivals coming in. So we have always worked on products looking that the customer’s needs, both stated and unstated, and tried to serve their emerging needs. We believe we have a greater understanding of the India market, customers’ requirements and this will help us take on the competition.
We have capacity here in Bangalore, more than we need. We also have an engineering team and have our people embedded in the customer and markets. Any company coming in afresh will take time. We will continue to improve our products. We are not unduly worried about competition but will not take it lightly.
What homework have you done for the upcoming value bus offerings?
We currently have players who satisfy the basic bus requirements while we created a niche for ourselves in the premium segment. There is space in between and as the economy progresses and people become aware, we expect that as in the case of trucks, we see a slow and definite migration from basic buses to a more modern bus. We came in at the top and have a niche and have bypassed the evolution process.
The bottom shift takes time and migration happens steadily from layer to layer. In India, we believe that this migration has begun towards a modern bus. The base has begun to shift. It might have specs that are intermediary in nature but we are aware and have seen how it happens and are prepared with the new brand.
Is there a market in another geography that resembles that of India?
We cannot typecast any market but there are elements of that evolution here in India and factors that have triggered that.
Can you name some of those factors?
For one, the migration of people from rural areas to the cities is one key factor. Then there is the unit cost of capital for the different modes of transportation. If we do not invest in capital and leave transport to the private sector, then it will be buses that take over. At the end of the day, we cannot blindly adapt a model. We have to see what suits India.
Was the Bus Rapid Transport System one of the factors?
We cannot blindly follow that and hope that it will be successful here. We have to see the larger picture — do we really see the expansion of capacity in railways? Or more rail subsidies and for how long? That may indicate that there could be a shift to roads, so outlays on road construction and road widening is a key enabler for bus transportation.
Are you looking at a long-term localisation plan for your buses?
We have to continuously work on cost effectiveness. We are running a few programmes between group companies and looking at synergies in combining suppliers or negotiating with them together. We have seen good success in this effort and it will definitely help us reduce our material/input costs. It could better negotiations or leveraging of volumes.
With regard to localisation, we have one at the group level for certain aggregates that can be made commonly, the engine which is one and is ongoing. We want to move towards local content. And the localisation is not about driving costs here down. The larger aim is to establish India as a global sourcing point by Volvo.
Even for exporting products or aggregates, that is the way forward. Our localisation has gained more speed in recent years; it gives suppliers more confidence and they are convinced by our credibility and commitment to India.
JnNURM has brought a smile to bus makers. Apart from this, what are the other growth drivers?
We do want to enter state transport undertakings or STUs, may be even a company like BEST. These companies have standard buses, and ageing fleets. In any Indian city, the fact is that people want a better quality of life, a better travelling experience. We must work with STUs and sell then the concept of how it is beneficial and they will be seen as being sensitive to their people’s needs as also being modern and progressive. Beyond the JnNURM, we have had STUs ordering with us, those keen to augment or start a modern fleet of new buses.
Is Volvo looking at the north-east India?
One state in the north-east has been a part of JnNURM and we have got some orders.
How have your efforts been on the export fronts?
We are exporting to the SAARC nations and have added South Africa for our coaches. We have received a good response. In Asia, we are looking at a market like Indonesia just as many other Indian companies. This factory here operates on global Volvo Production system standards and so it does not matter where a bus is made as long as it is a Volvo and the customer assured of certain standards.
What are your R&D efforts?
We have made a small start with independent R&D here in Bangalore that will work on our requirements. It is integral for us and to Volvo as a group. So we have a test track and this investment means that we will invest in R&D and design. We have 60 people in the R&D Centre. We have much to do to identify product requirements and create new variants. We have a multinational workforce here working shoulder to shoulder with our Indian staff.
In the aftermath of the fires, you did distribute DVDs and pamphlets, did that help?
I think it did help to inform travelers about the safety features prevalent in a bus, and what he/she needs to do in the event of an emergency and so his/her journey is safe and secure. We are looking at spreading awareness. We spend a lot of time on safety issues in our very comprehensive driver training programmes.
We are also trying to create awareness with travellers and at a higher level with customers. It is gratifying that our stakeholders clearly understand that Volvo stands for safety and are convinced about our credibility. That is encouraging for us. Customers continue to repose their confidence in us, and are coming back and ordering new coaches.
How can Volvo contribute to smart cities?
As a citizen of India, not just being in Volvo, I would say that the prime minister must translate all that he has committed into reality. Let the concept get rooted and we can all contribute.
We need planned cities for India’s future as it is becoming a nightmare for people to live in the cities we have now. We have to look at the entire eco-system, not just transport. We need to look at energy distribution, facility management, discipline on road usage and so on.
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