The bus segment continues to defy trends in the commercial vehicle (CV) market, driven by robust demand across various categories. In recent months, the strong push for electrification and the growing preference for inter-city bus travel has further fuelled steady demand for buses.

In the current fiscal, buses have been the only CV category to maintain robust growth. Between April and December 2024, bus volumes (medium and heavy category) surged by 31 per cent, reaching 43,856 units compared to 33,422 units during the same period last year. In contrast, truck volumes declined by 7 per cent. The light commercial vehicle (LCV) market fared slightly better, with passenger carriers seeing flat volumes, though goods vehicles declined by 3 per cent. Overall, the CV market recorded a 2.3 per cent year-to-date decline, according to the Society of Indian Automobile Manufacturers (SIAM).

The bus segment, one of the hardest-hit sectors during the pandemic, has seen substantial recovery over the past 2–3 years. Pent-up demand and a low base have contributed to consistent year-on-year growth. The full reopening of schools and offices in the post-Covid era sparked an initial surge in demand. Additionally, the revival of the travel and tourism industry, aided by broader economic recovery, has further boosted volumes.

Replacement demand

“Mandatory scrapping of older government vehicles under the vehicle scrappage policy has also boosted replacement demand for buses,” said Shamsher Dewan, Senior Vice-President and Group Head, Corporate Ratings, ICRA. He added that steady demand from offices and schools has been instrumental in supporting strong growth, with expectations of continued momentum in the near term.

Ashok Leyland and Tata Motors, leading players in the bus market, noted during their Q3 earnings calls that buses were experiencing strong utilisation across various categories, including school buses, intra-city, and inter-city services, driving significant demand in the segment.

Inter-city travel

Demand for inter-city bus travel is steadily increasing, fuelling growth in the bus segment. Once seen as a budget-friendly option, buses are now favoured for their connectivity, comfort and affordability, while also serving as essential last-mile connectors between metro cities, semi-urban hubs, and remote areas. Consequently, demand for medium and heavy-duty buses is on the rise.

“Inter-city bus travel today is about more than just reaching the destination — it’s about making the journey enjoyable,” said Rohit Sharma, Chief Operating Officer, AbhiBus. “Features like air-conditioned sleeper coaches and value-added services have greatly improved the travel experience, making it both convenient and comfortable.”

Electrification is emerging as a transformative trend in the bus segment. Government policies promoting electric vehicles, combined with subsidies and incentives for electric buses, have spurred demand in both intra-city and inter-city categories.

Dewan noted, “The focus on electrification is shaping the future of the bus segment. It’s supported by strong policy initiatives and growing demand for sustainable public transport.”

The bus segment is set to remain a strong performer in the CV market, driven by the growing adoption of electrification and ongoing infrastructure improvements increasing its desirability.