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Scania +20 is a plan for global growth

There are two main concepts of buses and coaches in Europe. The first is the complete integral vehicle built wholly by one manufacturer such as Setra or Van Hool. The other is the combination of a chassis built by one supplier with bodywork constructed by another.

This latter concept was once universal in Europe until the first integral vehicles came on the market around 60 years ago. Although integral construction has since become the dominant method of coachbuilding, it generally requires more sophisticated and expensive tooling, but with savings in material, weight and labor costs.

Scania has traditionally worked with many bodybuilders around the world. In 2008, the company built 7,807 chassis in Sweden, Poland and Brazil, but worked with approximately 100 different bodybuilders. Scania builds the chassis to identical specifications regardless of the location. If demand is up in one area but down in another it can fulfill orders in whichever factory has the most capacity.

Some of the bodybuilding partners are in countries that impose tariff barriers to protect domestic manufacturers from imported competition. Even so, such a high number of partners creates very high administrative costs. A comparatively small number of bodybuilders, probably no more than five or six, account for around half of the output. Some of the smallest factories will typically build only a handful on Scania chassis each year.

Scania is able to produce a wide range of different chassis for city, interurban and touring coach applications from clever permutations of a small number of standardized front and rear modules. On coach chassis especially there is a very high degree of commonality with the popular truck range. This gives advantages not only in production costs, but also in aftersales service. For instance, five, six and eight cylinder engines all have exactly the same cylinder bore. A whole range and only one piston — it makes so much sense.

It was hardly surprising that Melker Jernberg, senior vice president, Scania Buses and  Coaches, recently announced a new global strategy he calls Scania +20, to strengthen the company’s market position. It is his bold ambition to grow sales to 15,000 units by 2015.

Jernberg says in 2008 Scania was the second largest manufacturer of heavy-duty buses and coaches among the European and Japanese builders, behind Mercedes-Benz but ahead of Volvo and MAN. He also said that the profitability of his business had continued to increase. He believes it is the highest in the industry.

This new strategy will effectively create a third vehicle concept, coming somewhere between integral on the one hand and the chassis/body concept on the other; best described as an integrated concept.

“The foundation of the strategy is a global product family supported by all parts of the Scania organization from factory to dealer,” says Jernberg in announcing Scania +20. “Any customer who has chosen a vehicle from this global bus and coach family should never doubt that he is operating a Scania vehicle.”

He says this global bus and coach family represents everything that Scania stands for in terms of quality and design. Under this policy selected Scania truck dealers will also provide parts and service for buses and coaches, including parts for bodywork.

The OmniCity and the OmniLink were the first vehicles in the global bus family. The OmniCity is a full low floor bus available in single, articulated or double deck layout. The OmniLink is similar with a low floor in the front part of the vehicle and a conventional rear axle, which provides an area of higher level seating above and beyond the rear axle.

From a factory in Slupsk in Northern Poland, skilled laborers build these two models for a lower rate than either Scandinavia or Western Europe. Recently a British customer took delivery on the one-thousandth low floor double deck bus built entirely in Poland.

Scania has enjoyed a long and close working relationship with the Spanish coachbuilder Irizar throughout Europe, one that is increasing to include other global markets from Mexico and Brazil to selected regions of Asia.

Together the two companies have developed a wide range of local, interurban, touring and high luxury coaches, including tailor-made special vehicles for sports clubs.

Two years ago Scania worked with Lahti, a Finnish bodybuilder, to develop the OmniExpress, a range of coaches suitable for intense and frequent coach services that can quickly accrue high mileage.

Jernberg recognizes that an exclusive family is not enough to meet his ambitions. He must also supplement local solutions within a number of markets. Scania hopes to whittle down its bodybuilding partners around the world to a target lot of 20. Already, he has put some of the lower volume partners on notice, and he says many more will be getting the word in coming months.

Because it tests customer loyalty this is a risky strategy to see if they remain with Scania.

Doug Jack is with Transport Resources in the United Kingdom.

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Posted by on Mar 1 2010. Filed under Letter From Europe. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

1 Comment for “Scania +20 is a plan for global growth”

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