Why Volvo Trucks are Not Extensively Using in India Like Their Buses?

Volvo is a Swedish-based automaker that holds a high position in India, both in buses and trucks. Although their bus operation (through Volvo Buses), particularly in the inter-city luxury and state transport work concepts, has been quite visible across Indian roads, the truck element (through Volvo Trucks) is more of a niche. The company data shows that Volvo Trucks penetrated the Indian market in 1998 and mostly serves mining and over-dimensional cargo markets. In the meantime, the bus arm has already determined volumes: over 6,000 buses are serving India, approximately 1,500 inter-city buses in 35 cities.

So why this contrast? Why do we have Volvo buses everywhere in the high-end segment, and Volvo trucks remain more limited in application? The following are the main reasons, and what this entails as far as the commercial-vehicle market in India is concerned will be analyzed.

Major Causes of Low Adoption of Volvo Trucks in India

1. Expensive price and high overall ownership cost
   Volvo Trucks in India are priced very high: some of the models are available at a starting price of approximately 70 lakh and higher, and even over 1 crore in some cases. This renders them much costlier than a large number of local truck brands. Cost-per-km and loading capacity are also very important factors in a market, and therefore, many users would choose cheaper trucks than high-end brands.
2. Niche application emphasis (mining/ODC) over mainstream haulage
   The Indian branding by Volvo stipulates that the truck arm has established itself as a market leader in the Indian mining, Over-Dimensional Cargo segments, but not in mainstream haulage. It is equivalent to say that their product fit is closer to the specialised operations (heavy-duty, high GVW, difficult terrain) as opposed to the mainstream medium-duty logistics fleet that Indian trucking is dominated by.
3. Infrastructure and service network limitations
   Intensive truck activities in India demand superior after-sales service, supply of spares, reduction of the downtime of the service, and support to drivers. The premium brand in a mass logistics market has to compete not only with cars but also with ecologies. In the case of mainstream logistics players, local brands could be offering a better service price and parts supply case.
4. Differences in market segmentation and brand positioning
   Volvo positions itself as a high-end, luxurious, safe, and comfortable brand, which is appropriate for state transport undertakings (STUs) and high-end intercity transportation. In the case of trucks, numerous fleet operators make the minimisation of costs, high utilisation, maintenance ease, and load capacity more important than high-quality features. Indian trucking demand may not fit exactly with the Volvo truck positioning (premium, high-spec).
5. Scale issues and unit economics
   At the scale point where a person sells buses in the middle range (thousands of units in different states), when the premium price is accepted and brand recognition is present, volume economics are useful. However, in trucking, the fleet segment is very price-sensitive, and the margins are lower; hence, it is more difficult to attain the scale at a premium brand price. This implies lower unit sales, which may have an impact on the cost of parts, residual value, resale market, among others.
   

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6. Differences in regulatory and usage structure
   Indian buses tend to carry state contract regulation, premium intercity or personal tourist services in which operators are happy to spend more on comfort and brand. Trucks, in comparison, tend to be exposed to stiff cost competition, high margins, variable loads and routes, are more prone to wear and tear, and have lower brand loyalty. Therefore, an expensive truck will not find it easy to rationalize the additional investment, unless the operator has quite particular demands (e.g., high-value cargo, off-road operation, long service life).

The Implication of This for the Indian Commercial Vehicle Landscape

The sheer consideration that Volvo Trucks is a niche player whilst Volvo Buses is a potent player implies several wider implications:

• The commercial vehicle market is distinctly divided into a premium and mainstream market. A brand that hopes to make it in the mainstream truck market might be forced to push, not only on premium features, but on price, network of service and parts, and so forth.
• Premium trucks might be a niche, but vehicle uptime, reliability (as opposed to initial cost) should prove to be attractive to operators who place emphasis on life-cycle cost, and most of the Indian logistics market might continue to favor less expensive vehicles, unless the value difference is strong.
• The chain of storage facilities and spares, as well as the service network and infrastructure, are major differentiators. The premium brands will have to make huge investments to enable extensive operations outside the niche use-cases.
• It has been demonstrated in the bus success that there is are willingness to pay in areas where the user/buyer cares about the features included in the product, that is, premium features (comfort, safety, brand). However, in a place where cost and loading is the core, premium features might not necessarily be scale-motivating.

Conclusion

Volvo bus business in the Indian context will be suitable for a premium, comfort, brand-based positioning and can be widely applicable to state transport corporations, as well as high-end, private operators. In comparison, Volvo Trucks is less diversified as it is concerned with a premium truck offer in an economically minded trucking sector. The cost of entry is relatively expensive, its niche applications, and its service/parts support needs, as well as not fitting the main volume segment of Indian trucking, are also a factor that leads to its rather limited use.

Should Volvo wish to build trucks in India in a wider fashion, it would probably have to differentiate its product cost, service network, parts availability, and value proposition against the mainstream logistics market, other than high-end markets.