Bus operators seek easy financing as demand rebounds

Private bus operators are beginning to feel relieved as business is picking up as the Covid situation has improved considerably. However, all hasn’t been smooth sailing especially for most of the operators who took loans from banks and financial institutions.

Many operators experienced financial crisis due to business coming to a grinding halt during the government enforced lockdown during peak Covid pandemic. Many were forced to delay or defaults loan repayments.

With the market situation recovering, bus operators feel that they should not be penalised and have their credit ratings downgraded. Rather it should be seen as a fallout of the Covid pandemic event by financiers and should be overlooked.

As per industry estimates, around 11,000 buses (5-tonnes and above) were sold at the peak of the pandemic during FY21 as against 65,000-70,000 during the pre-pandemic peak period.

As schools and offices began opening up, the demand for buses is recovering slowly but surely having reached  18,000 units during FY22. Interestingly, almost 19,000 units have been sold in just first four months of FY23 and industry demand is expected recover to pre-Covid levels within a year. 

In this business, the good credit ratings of operators is essential for loans for new vehicle purchases. Due to unavoidable situations during Covid pandemic, many operators faced liquidity issues and therefore defaulted.  

Akash Passey, President, Bus Division, Volvo Eicher Commercial Vehicles laments that even though operators are confident and looking forward, the headwinds remain. "Support from banks is not forthcoming as yet and that is something they would like to see," said Passey. “Wherever possible, the banks need to overlook and help bus operators start afresh.” Passey is optimistic that at some stage the banks will realize it and have a change of heart.

Rohit Srivastava, Vice President, Product Line – Buses, Tata Motors claims that while the bus segment is making rapid strides, the recovery could have been at a faster rate.  "Financing is one of the issues. We are working with financers and customers are also working with financers so that the data of current business is seen rather than what happened due to a blackswan event (referred to as pandemic)," explained Srivastava

According to Sanjeev Kumar, Head-MHCV, Ashok Leyland though most of the bus fleet operators availed of the support from the government, the challenge now is to get back quickly on course to recovery. This will be determined by their ability to get fresh purchases.