State undertakings may add 5,000 vehicles, revive demand for buses in Q4

Topics Buses | Tata Motors | Ashok Leyland

According to industry estimates, the total volume of buses dropped by 90 per cent over last year
The bus segment continues to remain an area of concern as the passenger commercial vehicle segment as a whole is yet to recover from the Covid-19 pandemic and the ensuing nationwide lockdown. However companies are seeing some green shoots from the staff segment and expect STUs (State Transport Undertaking) to be a key growth driver. STUs are expected to add over 5,000 new vehicles. With the relaxations on lockdown, demand from other segments is expected to increase over the next six months as well.

According to industry estimates, the total volume of buses dropped by 90 per cent over last year. Lockdown-induced factors such as temporary shutting of schools, work-from-home and buses running at low frequency compounded by the cash crunch for transport undertakings have hit the bus segment substantially.

Rohit Srivastava, Vice President, Product Line, Buses, Tata Motors, the country's largest CV maker, said that today staff demand has been driving the industry. With offices opening up in most parts of the country over the past 3-4 months, demand has been rising, with specific sectors like manufacturing and pharma opting for staff bus deployment.

School demand has remained muted as many states have deferred opening of schools. Some have allowed students from senior classes to start attending. As more and more states allow opening of schools, demand should increase from Q4 FY21.

For Tata Motors, the total sales of passenger CVs accounted for about 10 per cent of the total CV sales in the previous year. This year, with the subdued demand for passenger CVs due to Covid-19, it accounts to less than 3-5 per cent of the overall Tata Motors CV volumes.

He said, with new technology the company ensures the lowest Total Cost of Ownership (TCO), thereby offering profitability even during the current tough times of the pandemic. Tata Motors has also been interacting with various stakeholders to ensure awareness of the improvements in the vehicles in the current emission norm era. 

"We also offer customised options for the body that are best suited to the applications, as per the customers’ demands to ensure optimum performance," he said.

"Growth is yet to be seen in the bus segment," added Anuj Kathuria, COO, Ashok Leyland, the country's second largest CV maker, "as the school segment is not there completely, while demand in fixed travel has risen in recent months."

He said some of the STUs have opened tenders include Delhi, Gujarat, Jammu & Kashmir, Bihar, Chandigarh and others.

Ashok Leyland has bagged few STU orders and expects order book to strengthen further during the fourth quarter.

Recently Ashok Leyland incorporated a wholly owned subsidiary 'Vishwa Buses and Coaches Ltd' (VBCL) with a paid-up share VBCL has been incorporated to carry on the business of bus body and coach-building.

Srivastava added, last year, STUs contributed around 15% of the overall bus TIV. While STUs have been discussing their purchase plans and have also floated a few tenders, the overall supplies in this year have been low. For many of the current tenders, the deliveries are expected to begin in Q4 FY21. Many STUs in the country have opted to serve the demands of public transport through the public-private partnership mode.

The total orders under discussion are in excess of 5,500 vehicles out of which around 2400 vehicles have already been awarded to various OEMs. These tenders include orders for alternate-fuel powered vehicles, like CNG and electric vehicles, he said.

It may be noted, FAME II aims to generate demand by way of supporting 7,000 Electric Buses (e-bus). In addition to the demand incentives under FAME II, demand generation is also targeted through subsidised electricity tariffs, exemptions or reductions on road tax, registration tax in order to reduce the capital investment associated with EVs. As part of these programs, SRTUs are being supported to gradually adopt e-buses into their fleet, with an order pipeline of more than 5,000 e-buses announced across the country.

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