In a significant new development, Volvo Buses recently announced its plans to use India as an export hub for developed markets like Europe. Later this year, the company would unveil in Europe its first bus made in its facility in Bangalore. We caught up with Håkan Agnevall, President, Volvo Bus Corporation and Akash Passey, Sr Vice President – Business Region International at Volvo Bus Corporation to understand the implication of this move, and also learn about Volvo's future directions in mobility.
Håkan Agnevall is President for Volvo Bus Corporation within the Volvo Group. He has an international industry background and has previously held senior management positions in Bombardier and ABB in various parts of the world. Håkan Agnevall has a Master's Degree in Engineering Physics from Lund Institute of Technology and an MBA from IMD in Switzerland. Agnevall was born in 1966 and is married with two children.
Akash Passey is presently the Sr Vice President – Business Region International at Volvo Bus Corporation, Sweden with responsibility for the Asia, Middle East/Africa, Asia Pacific and Chinese markets. He is also a member of the Volvo Bus Executive Committee, besides being the Chairman of Volvo Buses India. Passey is an industrial production engineer by qualification, and has over 20 years of experience in the truck and bus industry, predominantly in India.
ATR _ From defining luxury bus travel in India to being the first bus company from India to cater to the European market – this has been a significant journey for Volvo Buses. How do you look at this development?
HÅKAN AGNEVALL _ This is indeed a very significant step, a new era for Volvo Buses so to say. It has been in the making for quite some time. We had put in place the Asia Leverage Programme in 2011, and it is time to take this strategy forward. Exports from India into Europe were one of our goals within this strategy.
How does the Volvo group plan to further leverage on the strengths Asia as a region offers?
HA _ Our driving thought in starting the Asia Leverage Programme was to utilise the efficient engineering and manufacturing expertise in India, to meet the demands of other global markets. As a company, we constantly look at providing maximum value and high quality to our customers across all markets, and exports to Europe from India is a proof of these capabilities.
AKASH PASSEY _ Europe is one of the oldest complete bus markets in the world, which has all the global players, more or less originating from that region. Therefore, it's very significant that we are going into one of the most developed markets of the world with a new segment, new product from a new place. Our focus in the short and medium term is to scale this up and stabilise it. And if that goes well, it is natural for us to explore other opportunities.
Electromobility today is one of your core strategies for the future. Is this strategy relevant for emerging markets like India as well, especially in the short and medium term?
HA _ In addition to Europe, South America is a very important market for us from an electromobility perspective. Bogota, the capital of Colombia, for instance, is one of our biggest markets for hybrid buses. Then we have China, which today is the leading market in the world for electromobility. Our understanding is that 60 % of new city buses in China would be electric. We expect this to become a trend world over, but different markets would take their own time to adopt electromobility.
We think electromobility is very relevant for India, but these are still early days. With the FAME (Faster Adoption and Manufacturing of Electric Vehicles) scheme announced by the government, we expect electromobility to pick up speed in India as well.
Technologies related to electric mobility is now fairly mature. We have now sold over 2,000 hybrid buses in about 20 countries since their introduction in 2010. We have invested in electric mobility since about 2005 on a group level. We also did a careful analysis of the drivelines for the future from a group perspective. On the trucks side, there are a number of alternatives – different types of biodiesel, different types of natural gas and fuel.
When it comes to city buses, our view is pretty clear. We think electromobility will be the technology for the future, as it is not just energy efficient, but also reduces CO2 emissions and noise. We have taken a sustainable approach to electromobility, and when you combine that with a financially viable approach, we see electric mobility being a major force in the future. Of course, the pace of adoption will vary from market to market.
AP _ It will be a slow start in India, but will pick up momentum. About 60 % of our foreign exchange traditionally goes into buying fuel, and when we bring in technologies like these, they are a natural foreign exchange saver for the government. We see good possibilities in this area in the medium term.
Explain to us Volvo's Sustainable Transport Solutions Model that is based on the three pillars of economic, environmental, and social.
HA _ If we consider the environmental pillar, the hybrids – in the first stage – are delivering CO2 reductions of 30-40 %. When we talk about our electrical buses, we are talking of reducing fuel consumption by 90-100 %.
On the social component, when you combine the BOT system with electromobility, you get what we call a new mode of transportation because we then get a BRT (Bus Rapid Transit) system that is run by electric or hybrid drives. We understand that a BRT system is a very cost-efficient way of operating a large-scale public transportation system. If you do it in the right way, you get a motor transportation solution that is as competitive as a rail solution, but at a significantly lower cost.
Thirdly, transportation solutions need to make financial sense. The vehicles are more expensive but it is less expensive to operate them. Then there are also taxation effects that need to be considered. But the target we are setting for ourselves is to ensure that the solution is economically viable, considering the lifecycle costs.
Can we expect diesel hybrids to be the first ones to come into the Indian market?
AP _ Yes, as a first step, diesel hybrids would be the most natural choice.
The success of electric mobility would also depend on the ecosystem to support good products that you bring in to the market.
HA _ Yes, indeed. We have signed global agreements with ABB and Siemens. With Siemens, for instance, we have been working together since 2012 within the field of electromobility. One of the objectives is to develop a standard for charging infrastructure, so that cities can switch to electrified bus systems. Currently, we are at different stages of development in different cities like Mexico, Shanghai, and Montreal. With ABB, we are working on co-developing and commercialising electric and hybrid buses with open standards-based direct current (DC) fast charging systems that can charge buses through an automatic roof-top connection system at bus stops or through cabled charging systems overnight.
Basically, our electromobility strategy has three pillars – one, our flex mobility product offering, including hybrids, plug-in hybrids and full-electric buses. Secondly, the capability we provide through our partnerships with Siemens on the charging and battery side, and thirdly, our partnership with ABB wherein we are working on open standards-based fast charging solutions.
From an engine perspective, do we see Volvo bringing in the new engines for your buses in India?
AP _ Till about 10 years back, India had almost 100 % of its bus engines in the 80-110 hp range. The scale has started
to turn only in the last five-plus years. Our engine facility in Pithampur, for instance, is a global hub for meeting
the medium-duty automotive engine requirements of Volvo Group globally
for Euro VI-complaint 5 l and 8 l engines. The Pithampur plant has already been exporting powertrains to Volvo's global facilities. In the Indian context, with the upward movement of emission regulations, there will be a demand for improved engines. And we are ready to meet all such future demands.
The forward collision warning and emergency braking system that are to be launched in Volvo coaches this year seems like great solutions for the Indian market as well. Is the market mature enough to accept these?
AP _ All our products are made on the basis of our core values of quality, safety and care for the environment. A Volvo product would not make it to India or any other market without addressing these core values. If some of the new technologies coming into the European market make sense for the Indian market, we would look into it. But a large number of features available on our buses in India are not a natural regulatory requirement in India. If we think the Indian market demands any particular feature, we'll introduce them irrespective of regulations.
On current levels, how does your India business look? How would you measure the potential in India on both the bus and coach side?
HA _ Without stating numbers, I can tell you that we are here in the Indian market for the long run. We have been here 14 years, and I believe Volvo has been a pioneer in offering a sustainable transportation solution to the Indian market. The market has been slow since about 2012, and there have also been a lot of changes in the regulatory level. We see that the macro parameters would start to move in the right direction. How that translates into bus volumes is something we'll have to wait and see. We believe we have the right strategy for the Indian market. The volumes might be low currently, but we believe the potential of the Indian market remains fairly strong.
Interview: Deepangshu Dev Sarmah
Photo: Volvo Buses