Swedish premium heavy vehicles major Scania on Tuesday officially announced that it was forced to close down its in-house production of bus bodies at Narasapura in Kolar district, owing to a lack of demand in the premium bus business in India.
"Scania is restructuring its bus manufacturing in India and is forced to close down its in-house production of bus bodies in the Narasapura premises. The bus and truck chassis production continues to stay in-house as before," Scania Commercial Vehicles India said in a statement.
A section of the media had reported that Scania, owned by the Volkswagen Group, had closed down its bus manufacturing plant at Narasapura over two months ago, besides stopping operations in Goa, and ceasing a proposed project in Thane. The company is also reported to have relieved a majority of its 1,500 employees.
Scania has manufactured around 1,000 ethanol-run and premium buses at its Narasapur facility over the last three years.
The statement from the company mentioned, "The premium segment of the bus business in India is very small and the numbers have not been sufficient to enable profitability for Scania, with the order book being slow. We continue to have ready stock on the yard... Due to which it has become unviable to continue bus building operations at our Narasapura premises."
The company, however, claimed to remain optimistic about the long-term prospects in the Indian market and hoped for an uptick in demand for environment-friendly and high-performance buses from its stable, and would continue to meet demand as required, basis the ready stock and available partners.
"Scania is a responsible employer and will do right to its people and support the employees during this period of financial adversity. Scania is hereby offering a severance scheme to all impacted employees," it added.
Meanwhile, the Indian Bus Market Strategy Analysis 2017 of the Autobei Consulting Group informs: "The size of the premium bus market currently is around 2% percentage of the total market. Presently, Volvo is the market leader in the category of luxury buses, with a share of nearly 60%."
With Scania re-configuring its India strategy, the only major competitor to Volvo Buses remains Mercedes-Benz.