Tata Motors has entered into a contract to supply bus chassis to Brazilian bus manufacturer Marcopolo for its South America operations.
The two companies had signed a joint venture agreement recently to manufacture and assemble fully built buses and coaches in India.
Sourcing of chassis from Tata Motors will result in cost savings of up to 20 to 30 per cent for Marcopolo, said a source. The chassis will be supplied for 18-50 seater standard and luxury buses.
"Tata Motors will begin shipping chassis and related aggregates to Marcopolo in South America in a couple of months," said Ravi Kant, managing director, Tata Motors.
According to an industry source, Tata Motors will supply about 2,000 bus chassis during the initial 12 months, generating sales of about Rs 100 crore (Rs 1 billion) for the company. The supply will be scaled up with growing demand.
Marcopolo has globally sold 16,456 bus units in 2005 and has manufacturing operations in Brazil, Portugal, Argentina, Mexico, Columbia and South Africa.
The proposed India JV will be set up with an investment of Rs 150-200 crore (Rs 1.5 to Rs 2 billion) and will roll out 7,000 buses during the first year of its operations, which will be scaled up in a modular manner.
"We are inspecting multiple locations in north India for setting up the facility. A decision regarding the same will be announced shortly," said Kant.
The technology and expertise in chassis and aggregates will be provided by Tata Motors, and know-how in processes and systems for body-building and bus body design will come from Marcopolo.
Last financial year, overseas sales accounted for nearly a quarter of the total buses sold by Tata Motors.
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