Optare is carving a distinctive niche with its electric and lightweight vehicle strategy
As the smallest of the three UK-based bus builders Optare has always carved a distinct niche.
Now, the landscape is changing, and Optare has changed with it. It has a strong focus on electric vehicles and is majoring on the benefit of its lightweight products.
It already has long experience of single-decker electric buses, and its pre-production double-decker is currently on trial with operators [routeone, Test Drive, 7 March].
It’s also made the smooth transition to Euro 6 and is reaping success in the export market.
Having previously delivered a large order to South Africa, when we visited the factory, it was flat-out with a 114-vehicle order for New Zealand, alongside others for Australia.
But it is Optare’s work with customisation that has seen it retain key sections of the British market.
Its ability to genuinely meet customers’ needs – even to going down the route of vehicle re-design – has proved fruitful. It’s a USP that still stands firm.
Says Optare President Graham Belgum: “We can’t be a mass producer of Solo and MetroCity buses as the market isn’t that big.”
But there’s more to it than developing its range, the financial aspect is vital. Orders are hard fought over, especially where there are larger numbers of vehicles.
Part of what has been achieved is a lowering of the Sherburn-in-Elmet, North Yorkshire-based plant’s break-even point. In other words it doesn’t need to build as many buses to make the numbers stacks up.
Air quality driver
But he is sharply critical of the Government’s approach to air quality. “The UK new bus market is dying, and the government activity is unhelpful.
“The funding of exhaust treatment for Euro 4/5 buses to bring them to Euro 6 is unhelpful.
“I say to the government thank you for finding £100m for clean buses, but guess what, you’ve just given it all to Germany – where all the exhaust-after treatment suppliers are headquartered.
“UK-first doesn’t seem to feature on our Government’s policy.
“Yes, environmentally it’s good, but the downside is the money’s going abroad at a time when the UK bus industry is starved of new orders.
Adds Commercial Director Robert Drewery: “It’s going to make a hole in the new bus market, as it’s a disincentive for new orders.
“There isn’t a long-term focus in the industry because there isn’t a long-term strategy from Government. People are focussing on Euro 6 and retro-fit rather than what comes after that.
“After the last election there was supposed to be £100m for the next round of Office of Low Emission Vehicles (OLEV) funding. And two years later we are still waiting for what that money is.”
Says Graham: “Environmentally, in terms of ‘best bangs for your buck’, better after-treatment is good news. But by doing that you are extending the life of older buses; they are not being replaced.
“Therefore UK manufacturing – which is already suffering because of tendered/supported route subsidy cuts which have removed a large slice of buses from the market – is under greater pressure.”
Unique insight
Having previously been First Bus’ Chief Engineer, Graham is unique at his level in bus building, of having been on the ‘other side of the table’ in terms of running buses and understanding the financial dynamics of networks.
“Yes, there is patronage growth on some corridors, but overall patronage and the size of fleets is going down. This is having an impact. There is an increasing secondhand market as people are de-fleeting and we’ve had a number of business closures putting vehicles into the market.”
Transport for London (TfL) says it is predicting a £1bn revenue shortfall, so the affordability of new vehicles is going to be a challenge there too.
Overall, all the UK’s three bus builders are looking at about a one-third reduction in new UK bus orders this year. None of the big-six groups – which account for 70% of the market – have yet announced their orders, but routeone understands that the manufacturers’ expectations is accurate.
“We felt the biggest impact of the subsidy cuts because the Solo, which is one of the prime vehicles for urban environments, took the biggest hit two years ago,” co-incidentally at the point Graham took the hot seat at Optare.
So Optare has focussed on an export-led strategy, hoping that the UK market will eventually return. “But unless we sort out congestion, people are going to stay in their cars,” says Graham.
He adds that there are some “fantastic initiatives” in some of the UK’s major cities to push the bus agenda, which he hopes will bring new orders. Hopefully, part of that will be electric vehicles (EVs).
EV agenda
“One of the issues you’ve got at the moment is that EV procurement has slowed. We (and other manufacturers) have invested a lot of money in our EV strategy, assuming that the government will continue to back it.
“If we are not careful car will get the advantage; people are being incentivised to move to electric cars. Yet in terms of road space, you’re far better off getting people on a bus.
“We do understand that the government only has so much money to go around, but there are two consequences of the current decision-making.
“One is that those people least able to have a voice are being most affected. DfT’s figures prove that. If you’re not careful bus is going to become a middle-class solution and the people who most need it are not going to have it.
“For a service to become commercial it needs to attract people out of cars, but those who need it, such as lower-income people who need it to get to work, for example, and rely on subsidised services, won’t have them.
“That’s the genuine issue we face. And this is an impact on the UK economy.
“If the service isn’t there, the demand for new buses isn’t there. Because Solos are mainly bought for supported services, we were the first of the manufacturers to be hit by this two years ago. We lost about 120 Solo orders a year as a direct impact of subsidy cuts.”
“But we are realistic,” adds Graham. “We understand why this is happening so when I took over we said ‘if we are going to survive, what else can we do’ so we went hell-for-leather at what we could get for export.”
The result is “huge success” in New Zealand where Optare won its biggest-ever order based on its lightweight product. It took 400kg out of it the MetroCity, thanks to Alcoa wheels, structure lightening and the use of strong, but very light, composite flooring plus lightweight panels and glass.
“It is the lightest bus on a like-for-like basis – whether you measure it by length, number of seats or total capacity.”
The fuel saving is around 0.5mpg, thanks to the removal of about 5% of the weight in the bus.
Tempo is back
“We reintroduced Tempo for Australia because it can compete with the body-on-chassis market,” says Graham. Will it be available again in the UK?
“We’ll see what the UK wants but our strategy in the UK is assisting the commercialisation of the industry. Therefore, it’s what product you want and it needs to be bespoke.
The reintroduction of the Versa has won orders, for example with Blazefield, as it is a bespoke, highly customisable vehicle which is what operators are looking for to persuade car drivers to switch. Also in the UK key recent orders have included Go North East and Translink in Northern Ireland.
The other UK strategy is supporting the move towards electric vehicles. “The only way we can do that is with longer range, and we’re working towards that magic 200 miles on a single charge.”
Solo is more niche for hub and-spoke and feeder work.
MetroCity is “great for inter-urban as it’s lightweight and fuel efficient and can compete against 12m buses.”
MetroCity is targeting at displacing heavyweight ‘gas guzzling’ buses and in New Zealand the road user charge means below 12T GVW operators pay almost £5,000 less per year, per bus in tax “it’s a game changer” when bidding for routes, adds Robert.
Two Solos are on trial in Hong Kong. The move to low-floor is coming after two deaths with people falling from step-entrance Toyota Hiace minibuses, which led to an outcry about how disabled people are treated. The expectation is that Singapore will go the same way.
It is, a niche sector – community/hospital routes rather than public service – of the larger Hiace-served market, which suits the SlimLine Solos very well.
The expectation for UK orders is more than 100 buses a year, then there’s the potential add-on for buses in the Middle East with Solo, with tenders underway at the moment.
The expectation, overall, is that in the 2018/19 financial year, Optare will deliver around 300 vehicles – it will be growing sales while other manufacturers are seeing a decline, largely due to the fall in London, and UK urban loss.
Two other aspects are putting Optare back in the black: Parts supply is now in-house reducing costs, while a R&M contract for 102 Optares sold five years ago has been won with Transport for Greater Manchester.
Optare has also sorted out its historical warranty issues thanks to investment.
“We have stabilised an unstable business and I am confident,” adds Graham.
The next generation
We were shown the next generation electric double-decker, currently in build in the factory. At this stage, details are under wraps but more will be revealed by May when the two pre-production vehicles are launched. They will have 150-170 miles range, “using the latest driveline and battery technology, which includes higher-density batteries and highly-efficient electrical heating and driveline,” says Graham.
This is important as London has confirmed that it will introduce two double-decker electric routes this year, and is continuing with its single-deck electric strategy in the Ultra Low Emission Zone (ULEZ).
And, points out Graham, in terms of packaging “it’s all where it belongs” i.e. the batteries and drivetrain are in the engine bay, rather than distributed around the bus.
Along with the light-weighting, it means that Optare’s battery double-decker is only 400kg heavier than a diesel equivalent.
“The rest of the bus is the same as you’d get with a diesel, allowing you to do all your customisation.”
The future is electric
EV is going to come, says Graham. “It’s going to be forced one way or another. Environmentally you’ve got unitary authorities all looking at zero emission, and they will drive it.
“If bus doesn’t wake up and get there, then car will already be there and will stop bus in its tracks. The car industry will say, ‘we’re already there what’s your problem’, so as an industry we will be defeated by our own rhetoric.”
“In time we will become an electric vehicle manufacturer, because it’s the right thing to do.
“We will always do diesel, but we’re watching what’s happening around the world and electric is the direction of travel.”
“With the support of Ashok Leyland, there will be serious synergies with strategies, and we will get our volume benefit with suppliers.”
This world view means that Optare is set fair for the next stage of its journey.
Find out more: www.optare.com
