Volvo Eicher Commercial Vehicles is now betting on the strong demand for the buses for driving earnings, even as industry has grappled along with the sluggish sales of the medium & heavy duty trucks for this year. The domestic sales of bus of the VECV, which is joint venture amidst Volvo Group & Eicher Motors, have now accelerated by around 42 percent year-on-the-year for 4,826 units till now in the year 2012. The surge is driven by the demand of strong replacement by the under takings state transport.  Vinod Agarwal, the CEO at VECV, told that For this year bus market is now doing really well even though market of truck is now down. The undertakings of state transport are now renewing the fleet. They have seen plenty of buying in this year from the STUs.

Earlier, VECV had said that it had received order for around 1,019 chassis of bus to the Transport Corp of Gujarat State Road. The order will be worth more than Rs 100 crore, says Agarwal. Over last 1 year, Eicher gained a lot of orders from the undertakings of state transport like Uttarakhand & Rajasthan. It had received one order for around 600 buses from the Andhra Pradesh State Road Transport Corp. Ashok Leyland and Tata Motors, India’s top 2 manufacturers of CV reported slower sales of the medium & heavy trucks because of general economic slow down & expensive loans.

The sales of Tata Motors M&HCV went down by 23 percent to around 34,943 units during the times of April-June. Mean while, sales of heavy duty truck of VECV’s risen by around 26 percent to about 4,197 units in this year. Financial year of VECV does stretches from the month of January to the month of December. Agarwal says that they have a really good strategy which are implemented by them in the heavy duty buses and trucks. Due to this, the result of this is relatively doing much better than industry. They are continuing this growth, which is courtesy of more penetration in to the market and improved share of market.

Volvo Eicher

With sales of this company growing at faster clip as compared to the peers, the market share too increased. For example, the market share of around 4.7 percent in segment of heavy duty in 2nd quarter, & 3.8 percent in 1st 6 months for this year, vs. 3 percent in the last year. The bus segment share of market too has gone up to about twelve percent from about 9.7 percent in the last year. VECV has market share of 31 percent in the trucks of light & medium duty.

Total sales of VECV grew from about 11 percent in 1st half of the year,  and over all industry did see some sluggish sales in five tonne & above category. Agarwal had refused to give any precise guidance for full year, but had said that aim here is for continuing to grow very fast than industry. In last few years the competition for segment of truck had increased along with entry of a lot of new players like Asia MotorWorks (AMW), Mahindra Navistar, & Diamler (Bharat Benz).

VECV is now aiming to invest more than Rs 1,000 crore for expanding the capacity, over the year 2012 & 2013. The investment will now used for new plant of bus body building, new engine medium-duty plant, new shop of paint & expanding the capacities & products, says Agarwal. Medium-duty plant of engine will now become global platform for all the automotive requirements at Volvo Group, he says. All of these engines will be used for Eicher Trucks. Shares of Eicher Motors’ had ended by 1.8 percent @ Rs 1,986.10 at NSE. This stock is now up by 33 percent in the year 2012, out performing broader auto index of CNX, which gained by 17 percent.