New coaches and investments in the luxury bus segment are hinting at its revival.

The chief minister of West Bengal, Mamata Banerjee, flagged off the Kolkata-Agartala bus service recently. The service will run through Bangladesh rather than through the Indian states of Assam and Meghalaya. Compared to the earlier 1,650 km, the service will now require to cover 500 km only. Cutting down the travel time by one-third of what it takes via Guwahati, the first bus flagged by Banerjee was a Volvo luxury coach. West Bengal Surface Transport Corporation (WBSTC), which undertook this endeavour, is one of the many State Transport Undertakings (STUs) that have, or are in the process of procuring luxury inter-city coaches. The procurement, claim industry sources, is leading to the revival of the luxury coach segment. Sources cite the example of Maharashtra State Transport Corporation (MSRTC), which is also planning to expand its luxury, inter-city coach fleet size to 200 in the next two years. Called Shivneri, the MSRTC fleet comprising of Volvo 9400, currently runs on Mumbai-Pune, Thane-Pune and Pune-Aurangabad routes prominently. Of the current fleet size of 110 coaches, sources claim that 46 will retire at the end of July 2015. Of the 70 new coaches (35 from Volvo, and the rest from Scania) the undertaking is currently procuring, 12 Volvo coaches have already reached. The inclusion of 70 coaches will increase the Shivneri fleet size to 134 by the end of this year. Addition of another 66 coaches during the next year will swell the number to 200.

Green shoots

Though affirming that green shoots in the luxury inter-city coach segment are visible, not all are convinced if the luxury inter-city coach market is reviving. They point at the performance of the luxury inter-city coach segment in 2011-12. Segment leader Volvo sold 1,500 units during that fiscal. During the next fiscal, the numbers dropped. The company is said to be have sold 500 units during the last fiscal. This fiscal, the number is expected to rise to 600 units. With the luxury inter-city coach market expected to grow by 200 to 300 units during this fiscal, some industry sources claim that it stops short of a strong revival. There are those who disagree. They suggest instead, that such a rise speaks about sustainable growth.

Much water has flown under the bridge after the first luxury inter-city coach, a Volvo B7R, was delivered to an operator in 2001. It took a decade for the luxury inter-city coach segment to reach the highest ever level of sales achieved in 2011-12, claimed sources. Close to 2,000 inter-city luxury coaches were sold in that fiscal, they added. The only other player in that fiscal was Mercedes-Benz. Technologically speaking that is.

Technology is the driver

Technology has been the driver of luxury inter-city coaches. In terms of traveller appeal, it translates into safety, comfort, reliability and image. Image is perhaps the reason why, the homegrown iT09 Ashok Leyland luxury inter-city coach launched in 2010, and built by TVS-Irizar, could not set the sales chart on fire. Volvo began building its own bodies in 2008. The same year, Mercedes-Benz introduced its inter-city luxury coach in India. In FY13, the inter-city luxury coach market dropped. The same year, Tata Motors introduced the Divo luxury inter-city coach. The same year, Asia Motor Works postponed its plan to enter the luxury inter-city coach segment despite developing one.

Not exactly a watershed year, FY13 proved to be a year of correction. It also proved be a year when a new European player stepped in. Scania launched its Metrolink HD luxury inter-city coach in February 2013. It was made by Scania’s captive coach builder in Malaysia. A 12 m, and a 13.7 m and 14.5 m multi-axle luxury inter-city coach was introduced under the Metrolink nomenclature. Volvo and Mercedes-Benz were already offering coaches in these
size brackets.

Infrastructure dependent

Luxury inter-city coach segment growth, right from the time Volvo entered the Indian market in 2001, has been linked to infrastructural growth. It continues to be linked with infrastructural growth even today. The business premise of a multi-axle luxury inter-city coach is based on the fact that it will ferry people over longer distances in high levels of comfort, and efficiency. And, there can be no better example than the VRL Bangalore-Jodhpur Volvo luxury coach service. It takes 36 hours to accomplish the journey spread over 2,000 km.

Interestingly, the luxury inter-city coaches being inducted by many STUs, claimed industry sources, will be deployed along long distance routes. Apart from Kolkata-Agartala route, the Volvos the West Bengal Surface Transport Corporation is procuring, sources claimed further, will be deployed on routes like Kolkata-Dhaka and Kolkata-Guwahati. While a flawless service over such routes is only possible with the help of a good infrastructure, the tender for West Bengal is claimed to be for procuring 130 luxury coaches.

Taking competition to the next level

Lacking in numbers perhaps, and even after over two decades of existence, the luxury coach segment continues to be fiercely competitive. Volume remains constrained and the going is not as smooth. Neither despite the green shoots and an impending sign of revival. Not to be left out, Daimler has re-launched its luxury coach based on the O500 platform. The chassis is 50 per cent localised, and the Wrightbus patented aluminium body is 70 per cent localised. Similarly, Scania has begun building its Metrolink buses locally. The local content on them is to the tune of 70 per cent. Attempts to localise are certain to provide the two European luxury coach manufacturers an advantage in terms of price. However, will that be enough to wipe out the benefits earned by Volvo as a frontrunner? Claimed an industry source that competition is heating up. It has got to the next level where no stone is left unturned. Every opportunity is tapped and explored to the fullest. Then, it does not matter how painful it is when a buyer begins to negotiate a deal from as low as 65 per cent of the price tag. Though signalling a revival, industry sources are of the opinion that it may still take time for the market to reach the 2011-12 level. But, then there are those who are confident that the market will see a revival in the second half of this fiscal on the basis of the attention paid by the central government on fundamentals.

Replacement market

A large chunk of orders originating currently are due to the need to replace an ageing bus or a number of buses. No bus operator, claim sources, is willing to expand the fleet. This is attributed to the higher running costs and falling traveller count. If high interest rates are a limiting factor, it should not come as a surprise that luxury coach manufacturers are helping operators to sustain in a challenging environment by offering products like multi-axle coaches that can ferry more people. Also, ferry them over longer distances. Achieve faster turnaround times, and thus earn more.

Double-decker for long distance luxury travel

To facilitate luxurious long distance travel, Tata Motors is said to be studying the market for double-decker luxury coaches. It is also said to be testing the 15 m multi-axle Marcopolo Paradiso G7 based multi-axle luxury coach. This coach was displayed at the 2012 Auto Expo. When it arrives, the Divo may be withdrawn. In the case of double-decker coaches, Tata Motors is expected to bank upon Marcopolo to leverage its South American experience. The Marcopolo Paradiso 1800 double-decker luxury coach, for example, flaunts high standards of sophistication and comfort. Based on the Scania K 410 platform, it coud be had with bed type seats, which recline 150-degrees. They are made of viscoelastic foam that moulds itself to the body of the passenger. Each floor has a toilet; a sound and video system, air-conditioning and heating. The third steering axle technology provides benefits in the form of reduced operating costs, ease of manoeuvring and a smaller
turning radius.

Considering their expanse, and the need to invent, double-decker luxury coaches may take time to enter. New arrivals in the form of Mercedes-Benz luxury coach and Alma Mammoth based on a MAN chassis will mark the near future. They may address the replacement-oriented market as of current, indicating in no uncertain terms, that the market for luxury coaches is reviving. Albeit slowly, and in a sustainable manner.