During the last five years, public transport has moved up the political agenda in all the developed countries of the world. Most recently, the new director-general of The Confederation of British Industry in the UK has highlighted the cost to industry of inadequate transport systems and called for improved transport links.


The global bus and coach industry: trends and outlook to 2005, a new report from the Economist Intelligence Unit www.store.eiu.com/auto.asp forecasts that, as a consequence of government action along with improved design and technology, the bus is now set to become the global passenger transport of the future. The report predicts that global sales of buses and coaches will show a rapid increase of almost 22% by 2005. Following a 4% drop in 1999 to 183,000, sales will reach a new record of over 222,500 units. The bus is now the most widely used form of public transport with approximately 500bn trips per year being made on urban public transport systems throughout the world. There are 10m jobs directly related to the operation of these systems. After many years of slow progress, improvements in design and technology have resulted in a new generation of fuel-efficient and environmentally friendly buses.


World: actual and forecast bus and coach sales to 2005ab (units)













































































































1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

W Europe

19,633

21,059

20,687

24,317

24,160

24,155

23,670

23,455

23,690

23,810

24,005

E Europe

18,046

16,926

19,664

18,835

19,300

19,530

20,980

22,540

23,565

25,280

26,790

NAFTA

47,516

49,824

55,213

57,326

58,840

59,400

59,600

60,150

60,450

58,750

59,050

S America

22,420

20,371

20,440

22,866

16,455

19,135

21,430

22,950

24,520

23,530

25,950

Asia & Australasia

74,626

73,361

72,768

64,721

60,855

62,905

68,000

70,615

75,965

78,890

81,840

Africa & Mid East

3,455

3,190

3,240

3,420

3,480

3,530

3,830

4,370

4,680

4,890

4,890

Total

185,696

184,731

192,212

191,485

183,090

188,655

197,510

204,080

212,870

217,150

222,525

a Figures for 1995-98 are actual; the remainder are forecasts. b Above 6 tonnes GVW Sources: Trade associations; EIU forecasts.


The markets


Top five markets account for two-thirds of sales…



Although the US is by far the largest market for buses and coaches, annual registrations of heavy-duty transit buses and coaches are not much more than in Germany. The largest sector of the market (over 80%) is the school bus segment, with vehicles used not only for pupil and student transportation, but also in much lower volumes by works contractors, the police and armed forces, and churches. Many of these vehicles are also built on mass-produced truck chassis, but the larger and longer models tend to be purpose-built, by companies like Blue Bird and Thomas.

The US is becoming increasingly dominated by European manufacturers, through their acquisition of North American builders. Prevost, NovaBUS, New Flyer and NABI are all European-owned, as are Blue Bird and Thomas.


China is keen to modernise its whole commercial vehicle industry, which has always been more important than cars. A number of joint ventures have been signed on buses and coaches, principally with west European manufacturers, although these take a long time to get off the ground and the EIU warns that manufacturers are unlikely to see substantial returns on their investment in the short to medium term. A very high degree of vertical integration is still expected in China.


The huge market of India is largely satisfied by the two major domestic manufacturers, Ashok Leyland and Tata, both of whom also export buses, mainly to neighbouring markets, but also as far afield as the Arabian peninsula and East Africa.


Russia desperately needs to renew its large rapidly ageing bus fleet, but the operators are simply not earning sufficient income. They can only be replaced when the financial situation improves. In the meantime western manufacturers should be cautious about entering into joint ventures.


Brazil has a very strong bodybuilding industry of its own. Marcopolo is the largest bodybuilder in the world, capable of producing more than 9,000 units a year, and there are numerous other influential bodybuilders in Brazil. Marcopolo is the only South American bodybuilder to have looked seriously at the European market. A small factory was established in Coimbra, Portugal, in 1995 to build bus and coach bodies which were adapted to the requirements of European customers, with a high percentage of export, principally to the UK and the Netherlands.


Although western Europe only represents about 12% of the world’s market for larger buses and coaches, the manufacturers probably account for 60-65% of the world market through subsidiaries, licensees, joint ventures and assemblers, and that is set to rise. Sales of buses and coaches in western Europe will decline to 2002 when the EU plans to encourage competition in the procurement of public services, which will stimulate sales thereafter.


The manufacturers


DaimlerChrysler is the largest bus builder in the world by a significant margin, with production of around 35,000 units in 1999.


Henlys of the UK, the dark horse of European manufacturers, is second largest with production of around 24,000 units, even though the name does not appear directly on any product.


It is followed by Telco (Tata) of India, which produces 18,000 units a year approximately.


Volvo and Scania combined (assuming the acquisition takes place) will produce about 15,000 units a year.


Ashok Leyland, also of India, is estimated to have produced between 12,000-13,000 units in 1999.


Irisbus is the latest major player, having become operational in January 1999. It combines the bus and coach operations of Renault and Iveco on a 50:50 shareholding basis. Renault also brought substantial majority shareholdings in Karosa of the Czech Republic, and in Heuliez Bus, a smaller French builder with which it has been associated for many years. Since the merger, Irisbus has agreed to take a 67.7% shareholding in a company to be known as Ikarus Bus. It is in the process of acquiring all the bus manufacturing and sales rights held by Ikarus Rt, the former Hungarian giant.


As in the truck industry, the number of manufacturers will continue to decline, principally through take-over activity. Major new industry groupings such as the Volvo/Scania merger and the formation of Irisbus highlight the rate of consolidation across the industry, and the EIU predicts that this will continue.


In the developed world, there is a growing trend to transfer the operation of bus services from the public to the private sector. In the last five years, major private sector operators have emerged, such as Stagecoach, FirstGroup, Arriva and National Express of the UK, also Vivendi, Transdev and Cariane of France. They are all forecast to grow rapidly. Stagecoach and FirstGroup each have around 20,000 vehicles, which gives them tremendous purchasing power with manufacturers-a development, says the EIU, that will increasingly have an effect on product design and pricing.


Growing interest in alternative fuels and fuel cells


Alternative fuels, such as compressed natural gas, liquid petroleum gas and ethanol, all of which have disadvantages, have been attracting much attention, but in the medium to longer term there are high hopes for the fuel cell. There are several prototype buses with fuel cells running in North America and Europe, and the EIU expects Mercedes-Benz to take a lead by offering fuel cell power as a regular production option by 2005-although at a price premium.


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