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Why India’s Bus Sales Are Set To Fall First Time In Three Years

Sales of passenger carrier buses contracted 25.7 percent on a yearly basis.

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India
3 min read
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Bus sales are on track to decline first time in three years in India, as cities are not increasing fleet size despite inadequate public transport.

That’s because the government scrapped separate funding to buy new buses and merged it with its flagship Smart Cities Mission. Sales of passenger carriers contracted 25.7 percent on a yearly basis to 27,431 units in the first 10 months of the year ending March.

Sales of passenger carrier buses contracted 25.7 percent on a yearly basis.

Sales have not been picking up owing to the shortage of orders from state transport authorities within and outside the Smart Cities Mission, said Sugato Sen, deputy director general at lobby group, Society of Indian Automobile Manufacturers. Typically, the bulk of orders come from local public transport authorities.

Barring the metropolises, India lacks suburban rail and metro networks. A majority of cities and towns rely on bus transport.

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The nation has 1.4 buses per 1,000 people, according to the Ministry of Road Transport and Highway report for 2015-16 that cited data from the IRF World Statistics. That’s fewer than developing peers like China (1.8), Brazil (4.5), and South Africa (6.5), and also developed nations like the UK (2.5), the US (2.7), and Australia (4). 

There were about 1.5 million registered buses in India as of March 2015, according to the government’s road transport data. That compares with over 150 million scooters and motorbikes, and 26 million cars. About 17 million new two-wheelers and three million cars are sold every year, adding to traffic snarls and delays.

Prime Minister Narendra Modi’s administration is spending to build new roads, ports, and metro rail networks to ease urban infrastructure. But it scrapped the earlier Jawaharlal Nehru National Urban Renewal Mission that allocated separate funds to cities to increase bus fleets. The Atal Mission for Rejuvenation and Urban Transformation and Smart Cities Mission that replaced the plan set aside no separate corpus for buses.

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Overall allocation increased but it was up to the city administration to decide where to spend. More long-term solutions began to take precedence such as improving road quality and cleaning the cities.
Kavan Mukhtyar, Partner, Automotive, PricewaterhouseCoopers

Emailed queries to the Urban Development Ministry remained unanswered. Tata Motors Limited and Ashok Leyland Limited, India’s two largest bus makers, were yet to respond to emails. Brihanmumbai Electric Supply and Transport Undertaking and Delhi Transport Corporation, among the largest buyers of buses, didn’t respond either.

The state transport authorities are also trying out a new business model based on inducting buses on a time-bound contract, Mukhtyar said. The contours weren't ready yet, added to the decline in fresh orders.

SIAM, however, ruled out the replacement cycle as the reason for the slump in orders.

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(This article was originally published on BloombergQuint and has been republished here with permission)

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