Pest Analysis

PEST ANALYSIS

Political Factors 

Government has intention of boosting infrastructure sector and restart stalled infrastructure development projects.

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Governments’ decision to implement NHAI projects will affect sales of the company.

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JnNURM (Jahawar lal Nehru national urban renewal mission) with an investment of $20 billion dollars over seven years has hugely helped in development of the transport facilities in India and will likely increase the sales of the company as government has sanctioned purchase of 14695 buses .

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Government has increased spending on rural and urban transport and introduced subsidies on environmentally friendly transport.

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Disinvestment policy of government will attract FDI and hence will help in negating the affect of increasing interest rates due to inflation.

Economic Factors 

The economy of India is showing low growth which might help in increasing the sales of the company as people are likely to switch to public transport.

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Increased participation in commercial vehicles funding by public-sector banks has increased ease in finance availability and hence help new entrants to come into the industry.

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Due to rising unemployment which is a result of slowdown in the economy, people from the lower income group would likely to switch to public transport like buses and hence increase the sales of the company.

Social/Environmental Factors 

There is different requirement of buses in various parts of country.

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In southern and western parts big cities connected by railways/air but for small towns, buses are main means of transport.

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In eastern parts of India, mini buses are preferred as local transport means because of hilly region.

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There is large demand for environmentally friendly and low fuel consuming means of public transport because of rising environmental awareness and rising fuel prices.

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Due to rising population and increasing age group of people, preference is now given to buses with air condition and air cushioned seats.

Technological advancements and innovations 

New Volvo buses to be launched by state transport departments whose seats can be reclined to 130 degrees which is higher than the current 110 degrees. These buses would

be launched on long routes to make the long journeys more comfortable for the passengers. 

With increasing competition from companies like Tata motors and Ashok Leyland the company the company also brought a 14.5-m multi-axle city bus which is being pitched as a solution for urban traffic congestion.

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Volvo launched the CNG versions of its 8400 city buses garner better share of the city bus segment in the country.

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Volvo is also expected to launches buses that run on hybrid technology platform. The platform involves a blend of electric and diesel technology, which could ensure 40 per cent cost efficiency but would cost 50 per cent more.

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New BS3 and BS4 engines having modular capacity of 4.7 litres to 8 litres with euro 3 and euro 4 compliances are being developed. These engines would be protected for euro 5 compliance and would be stronger and reliable by design and have better fuel efficiency.

These types of technological upgrades have made the company more competitive as compared to its competitors. This is evident from the market share of Volvo which is around 76% in the luxury bus market and around 46% overall. After doing PEST analysis for the company we can come to a conclusion that the sales of the company are expected to increase and the company would be able to grow in tandem with the industry despite of economic slowdown prevailing in the country.