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The domestic bus market is seeing a recovery in demand this fiscal after a year of de-growth. Bus makers and analysts project growth in volumes ranging from high single-digit to low double-digit in FY19.
In FY18, volumes fell 14 per cent at 84,658 units, primarily because of fewer orders from State transport undertaking (STUs), which account for a little more than a third of bus sales in India.
Uncertainty in the implementation of a bus body code was also a reason.
But the decline in sales in the up-to-12-tonne segment was relatively low because the demand for school buses, last-mile connectivity and feeder routes continued to offset the impact of lower STU orders.
Meanwhile, this fiscal, the segment is seeing positive momentum. In April-August 2018, total bus volumes stood at 41,440 units, up 19 per cent from the previous year period’s 34,882.
STU orders are reviving, driven by replacement demand.
“This year, the Indian bus segment is growing at 15-17 per cent,” said Sandeep Kumar, Head - Sales & Marketing, Passenger Commercial Vehicles, Tata Motors.
“The segment is experiencing growth due to multiple factors such as increased focus on infrastructure development, rapid urbanisation, low penetration of public transport and affordable housing projects across the country.”
B Srinivas, Senior Vice-President, Sales & Marketing, Buses, VE Commercial Vehicles, said good demand from schools and orders by various State government agencies based on PPP models added to the growth.
Online push
The bus segment also benefited from healthy demand from online aggregators and the staff carrier segment.
“Additionally, the fleet replacement cycle is gradually reducing with rising customer expectations, which is also likely to reduce the average fleet age and spur replacement-led demand,” said Shamsher Dewan, Vice-President and Sector Head - Corporate Ratings, ICRA.
Greater potential
India certainly needs more buses for efficient transportation. Each year 90,000-1,00,000 new buses are being sold, but this figure has the potential to more than double as Indian public transport is yet to reach its optimum potential, said Tata Motors’ Kumar.
The bus segment’s growth outlook remains favourable over the medium term driven by the Centre’s focus on improving urban as well as rural transportation and initiatives such as Smart Cities.
Also, several STUs have old buses in their fleet, needing replacement shortly. However, financing remains a constraint, said Dewan.
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