Is the used coach market finally starting to rebound?

Used coach market showing some early signs of rebounding

The used coach market was greatly affected by the COVID-19 pandemic. A collapse in demand coupled to excess supply impacted values. But consensus among some suppliers is that signs of change have emerged over recent months, and that a steady return of coaching activity has led to interest in – and the values of – used vehicles to slowly start to rebound.

Neither are yet anything like where they were at the beginning of 2020. Irizar UK Sales Director Julie Hartley observes that while the used market’s position is improving, full recovery is still some way off. “But if we see no further lockdowns, I believe that the worst is over. We have reduced our holding of used stock and we are seeing demand come back.”

Used coach values are of critical wider importance, Mrs Hartley continues. They impact the trade-in offer that can be made against a new purchase; when at a particularly low ebb, they can lead to what trade body RHA calls the “stranded asset” phenomenon. For Irizar UK, like some other dealerships, it remains the case that passenger capacity is key for used stock.

PSVAR: Changing dynamic in the used coach market

In a notable market shift, recent government messaging means that PSVAR compliance for used coaches is not quite as relevant as it was. Ongoing political dithering has left the approach to the Regulations from April 2022 unclear. That has been credited with softening demand for some used compliant coaches as part of the industry awaits the next move, although conversely, the appetite for PSVAR remains strong in other areas of the market.

That general position is underscored by lift manufacturer PLS. It has seen demand for coach lifts slow slightly since Under-Secretary of State for Transport Baroness Vere wrote to the coach industry on 6 July outlining the early stages of how medium-term exemptions to PSVAR may work. No further information has yet followed.

As a further example, one used coach dealer points to activity around Caetano Levantes. When PSVAR in coaches first rose to prominence, used Levantes became hot property. While they are still in demand, interest has cooled more recently.

Used coach market rebound starting, some suggest
Industry figures agree that the used coach market is stronger than it was, but there is still a long way to go for its full health to return

The number of converters that can upgrade existing fleet members to satisfy the Regulations may also factor into changing demand for used compliant coaches, says Odyssey Coach Sales Director Darren Critchley.

Growing suspicions that a fleet percentage-based pathway to achieving eventual compliance may be adopted could also be an influence, Mrs Hartley adds, particularly among operators that already have multiple coaches that satisfy PSVAR.

Late model used Euro VI, PSVAR coaches show strength in market

But while some demand for PSVAR in used coaches has slowed, compliant late Euro VI models that are low mileage and well-presented continue to move quickly, Scania (Great Britain) finds. It believes that some buyers see those vehicles as a good alternative to buying new; other customers have traded in similarly aged but non-PSVAR coaches against them.

General Manager Used Bus and Coach Steve Lambert says that the availability of such models has led to a “bumper” year so far. Scania began 2021 with 46 used coaches in stock. Currently it has 20, although that drop has been influenced by a reduced number of part-exchanges owing to more modest deliveries of new vehicles than usual.

The dealer has made a concerted effort to push up used values in 2021. While Mr Lambert says that late-model, high-quality, PSVAR compliant coaches have been most popular – something that he expects to continue into 2022 – Scania has also sold “quite a lot” of non-compliant, lower-capacity examples.

Mr Critchley observes that while it is difficult to detect an overall pattern around PSVAR in used coaches, the opposite is true for Euro VI. The latter is in strong demand in areas that are, or will be, part of emission control zones. However, PSVAR is a factor in mid-sized used vehicles. For those where no conversion has yet come to market, interest has slowed.

What of finance for used coaches?

In some instances, securing finance has become a sticking point, says John Hill, Director of John Hill Coach Sales. That is understandable, he adds; some funders “have had their fingers burned” over the course of the pandemic and they are now taking a highly risk-averse approach.

Because of that, the Melton Mowbray business is seeing more interest in lower-value coaches that can be purchased without the need for finance. Mr Hill adds that current demand at a traditionally quiet time of the year is stronger than usual, but that could be down to the general lack of activity for a prolonged period while large parts of the industry were in virtual shutdown.

He agrees that an increase in the value of used coaches is important for the health of the overall market. If that does not happen, there is a severe implication for depreciation rates of new vehicles. “The only way that can be avoided is if used values increase,” he notes.

Odyssey has also seen most buyer interest in lower-priced coaches. Mr Critchley suggests that some operators, uncertain of how the winter will pan out, remain cautious around outlay. A lower-risk deal is also more attractive to finance companies, he adds. One thing is clear: The used coach market is recovering, but it will remain difficult to predict for some time yet.