case study Volvo
Executive Summary: In 2001, Volvo Buses India sold 20 coaches. By December 2011, 5,000 of them were running on Indian roads. Volvo did not achieve this by toning down its products or cutting prices as multinational companies often do. It developed the market and waited for it to mature. Volvo now has 76 per cent of the Indian luxury bus market. The company changed the way Indians travel. Now, as the competition closes in, it is preparing to launch products that could transform the market – again. By Geetanjali Shukla
July 8 2012 Business today 99
case study Volvo
Think Beyond Buses
the usual practice. Passey says: “We told them you don’t need that with a Volvo. We’ll give you one every 400 km.” Volvo also departed from the norm by offering service support for the entire bus, and not just individual parts. With maintenance hassles reduced, operators could focus on routes. For example, Mumbai-based neeta tours and travels, which had 20 Volvos in 2004, figured it could serve seven destinations. a bus could leave ahmedabad at 10 p.m., reach Mumbai at 6 a.m., then go to Pune and back, and then head back to ahmedabad at 10 p.m. operators could also focus on sprucing up service with hot towels and entertainment. this also meant they could raise ticket prices by as much as `100 on some routes. Phanindra sama, founder and CEO of redBus, a portal that sells bus tickets, says, “the Volvo phenom-
The road To success
decade ago, buses were more or less a by-product of trucks. they were built on truck chassis. Body builders bought chassis primarily from telco (now tata Motors) and ashok Leyland. the difference between city and inter-city buses, or regular and ‘deluxe’ ones, was reclining seats and a stylish paint job. that is how things were when Volvo Buses entered india. the swedish company bid for a tender by the delhi transport Corporation (DTC) in 1998 while showcasing its B10LE low-entry city bus in several cities. the bus drew much interest. akash Passey, senior Vice Presidentregion international, Volvo Bus Corporation, who headed india operations then, says many people came to see it at the 1998 delhi auto expo. He laughs, recalling an animated discussion between two youngsters he overheard. “the older of the two, in an attempt to explain how the bus loses height, said: ‘When it halts, the driver jumps out and deflates the tyres’,” he says. the coach prompted more weighty concerns too: were india’s roads and travellers ready for rearengine buses? What about prices? Volvo city buses cost up to 10 times more than those used by state trans-
CHanGe strateGy Volvo brought in its inter-city bus when it saw the market was not ready for a city bus seLL tHe ConCePt, not just tHe ProduCt Volvo engaged with all stakeholders — from operators to passengers to drivers — to sell its buses use MaCro CHanGes to your adVantaGe when Volvo saw that increasing congestion and growing environmental awareness were making public transport attractive, it brought back the city bus CHanGe tHe GaMe when the competition started to close in on Volvo, it introduced products that would increase the number of passengers
port corporations. Meanwhile, the
DTC tender was shelved.
selling to state companies was proving tough, so in 2000, Passey changed tack. He imported two Volvo B7R inter-city buses from Hong Kong and singapore, and sent them out on a six-month demonstration drive. the B7R cost five times more than a
‘deluxe’ bus. But he persevered. “i felt there was little reason why an airconditioned bus would not work in a tropical country like india,” he says. the changing economic landscape strengthened his resolve. the company approached private operators who ran inter-city ‘deluxe’ buses and could price tickets higher. Volvo refused to compromise on product specifications. Passey points out that inter-city buses are 12 metres long everywhere in the world. But in...
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