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Reading the market

Reading the market Reading the market
A good year for buses but not so good for coaches; that was the message from SMMT’s annual briefing following the publication of the registration figures for 2012. The total market for buses and coaches last year was 3,811, comprising 700 coaches and 3,111 buses.

Rather confusingly, SMMT’S reports a total of 8,102 units in its bus and coach figures, which includes minibuses which it terms “converted buses”. However it can’t be sure that this actually accounts for all the factory-fitted conversions, and it certainly excludes those minibuses which may be converted after first being registered as a van.

In any event, the headline of the trade body’s press release ‘2012 is a bumper year for UK bus and coach market’ is not really an accurate reflection of how the industry may be feeling, and doesn’t quite add up when you remove these 4,291 small bus conversions from the overall figures.

The SMMT’S bus and coach section chairman, Volvo’s Adrian Wickens, commented that the slight drop in coach registrations in 2012 continued the historic trend of the past decades, signalling that the figure for 2013 is likely to be down again. Wickens reported, however, that the trend for good growth in the express sector is continuing, but that the retail coach sector faces serious challenges with access to capital still being a major issue for smaller operators.

It should be pointed out here that there is some under-reporting in the coach figures for 2012, as the data for Irizar integrals is missing, something that will be rectified for 2013, and there are always a few end of year registrations which don’t quite make the cut for the January publication, and this includes at least a dozen additional coaches in 2012.

On the bus front, last year was more positive with an 18.3 per cent increase year-on-year. This included a minor ‘Olympic boost', according to Wickens, with some operators bringing forward deliveries for the summer games that were then moved on to the regions. Wickens is not terribly optimistic for the year ahead and predicts a fall in 2013 to a total of around 2,700-2,800. He points to the fact that operators face continued uncertainties about BSOG arrangements and local authority funding cuts, making them more nervous about investment.

Wickens argues that whilst in the past the bus industry was somewhat immune to the ups and downs of the economy, that is definitely not the case today. The emphasis on government debt reduction and the ensuing squeeze on local transport budgets, combined with low, or no growth means that the industry will only bounce back when the general economy does.

There has been a good deal of speculation about the potential impact of a ‘buy forward’ of Euro 5 chassis this year before the introduction of more expensive and potentially more complex Euro 6 vehicles. However the manufacturers are not anticipating much of a ‘buy forward’ effect, as they believe that the format of the derogation for Euro 5s will mean that the effect is extended over a longer period.

The rules for the derogation are yet to be finalised – something of a concern in itself – but it looks likely that manufacturers will have to declare any Euro 5s by the end of September 2013 and then may have until the end of 2014, or the middle of 2015 for body-on-chassis build processes, to register the vehicles. What this means in effect is that all the manufacturers will need to be ready with Euro 6 production by this autumn as any vehicles produced after September wil have to be registered by the end of the year, if they have not previously been declared for the derogation. And “declared” means the coming together of major components and the issue of engine and chassis numbers, so it is not a cost-free exercise and manufacturers are only likely to be doing this for vehicles that are allocated to named orders, rather than building stock Euro 5s.

Some customers might opt for Euro 6 vehicles as soon as they are available and ahead of the 1 January 2014 deadline of course, including perhaps TfL, but this is likely to be the exception rather than the rule.

Beyond Euro 6 there are other looming legislative delights awaiting the industry, including a tightening of noise limits which are  currently being enthusiasticaly discussed by the European Parliament. These will start in the car and van sectors, but will certainly extend to buses and coaches at some point. As it stands, the proposed limits will require significant noise abatement by manufacturers and suppliers, with components such as tyres in the firing line as well as powertrains.

On a more positive note, Wickens advised that there is some speculation that the UK’s axle limits could be raised, possibly to allow 19 or 19.5tonne vehicles on two axles. This will come too late for the start of Euro 6, but it could have an impact in future years as it would allow additional options for two-axle vehicles beyond 12m.

Hybrid buses is one area where the UK is definitely leading the way in Europe, and with around 1,000 in operaton, this is now undeniably an important sector. Wickens believes that hybrids are here to stay, and not just a transitional technology that will shortly  be replaced. He predicts that the current hybrid buses will operate for their full working life as hybrid-powered vehicles. Whilst acknowledging that electric buses could have a growing role, particularly in areas perceived as having acute air quality sensitivity, Wickens remains convinced that the internal combustion engine has a long future, in combination with hybrids and plug-in hybrids and the use of bio-derived diesel. He pointed to the fact that some of the hybrids in operation, albeit a small proportion, have been ordered by operators without Green Bus fund support.

Gas is now in the mix too of course, and it is quite likely that there will be more in the announcements of Green Bus Fund 4 in May. At present gas is something of a competitive issue, being pushed by MAN and Scania in partnership with ADL, but if operators find that the technology works for them then it won’t be long until all manufacturers add a gas option to their line-up. Of course it could go the way of previous rushes for gas in the bus industry, but only time and real-life operating experience will tell.

Of course, the UK's bus and coach manufacturers are busy building for export markets as well as for UK-based operators and ADL, Optare and Wrightbus all won important export orders in 2012. 
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