Bus operators are looking for easy financing as demand recovers

Private bus operators are beginning to feel relief as business has picked up as the Covid situation has improved significantly. However, not everything is smooth, especially for most operators who took loans from banks and financial institutions.

Many operators have faced a financial crisis as business has ground to a halt during the government-imposed quarantine at the height of the Covid pandemic. Many of them were forced to delay the payment of the loan or repay it by default.

With the recovery in the market, bus operators believe that they should not be penalized and have their credit ratings downgraded. Rather, financiers should see this as a result of the Covid pandemic and ignore it.

According to industry estimates, around 11,000 buses (5-tonne and above) were sold at the peak of the pandemic in FY21, compared to 65,000-70,000 in the pre-pandemic peak.

As schools and offices have started to open, bus demand is slowly but surely recovering to reach 18,000 units in FY22. Interestingly, nearly 19,000 units were sold in just the first four months of FY23, and industry demand is expected to recover to pre-Covid-19 levels within the year.

In this business, good credit ratings of operators are important for new car loans. Due to the unavoidable situations during the Covid pandemic, many operators faced liquidity problems and thus defaulted.

Akash Passi, president of Volvo Eicher Commercial Vehicles’ bus division, laments that while operators are confident and forward-looking, headwinds remain. “Support from the banks is not expected yet, and that’s what they would like to see,” Passi said. “As far as possible, banks should stay away and help bus operators start anew.” Pasi is optimistic that at some stage the banks will realize this and change their minds.

Rohit Srivastava, Vice President, Product Line – Buses, Tata Motors says that while the bus segment is making rapid strides, the recovery could have been at a faster pace. “Funding is one of the challenges. We work with financiers and clients also work with financiers to see data about the current business, not what happened because of a black swan event (called a pandemic),” Srivastava explained. .

According to Sanjiv Kumar, Head of MHCV, Ashok Leyland, while most of the bus fleet operators have benefited from government support, the challenge now is to quickly get back on the recovery course. This will be determined by their ability to receive fresh purchases.