Caution continues to dictate the future of new coach sales in the UK, but as operator bookings strengthen, optimism grows for spring
Society of Motor Manufacturers and Traders (SMMT) statistics recently revealed that 2021 was the worst year on record for new UK coach and bus registrations. But conversations with dealers in the UK show there may be a spring surge on the horizon for new coach sales, and that some markets have shown green shoots of growth.
Sector recovery varies by work?
Simon Wood, General Manager New and Used Coach Sales at Alexander Dennis, reveals Plaxton was able to achieve sales into certain markets in 2021, despite losses fuelled by the COVID-19 pandemic. “The touring market collapsed completely but we were still selling vehicles for scheduled service and particularly schools,” he reveals. “There was very little travel last year and people were reluctant to invest. We are starting to see a few green shoots now – operators are starting to get busier and the enquiry levels have picked up in the last few weeks.”
Mr Wood reveals that production that restarted in January at Plaxton’s Scarborough facility is primarily working through Leopard stock. “It’s a positive to start again and it’s great to see coaches coming down the line at Scarborough. We are still watching this space to see where the market goes, particularly in terms of PSVAR – there’s a bit of uncertainty on that still in terms of dates and extensions – that drives the demand as well.
“Operators need to be more flexible now, and the Leopard held its own last year through the lockdown. “
The outlook in 2022 is more positive according to Mr Wood, but the industry is still in a “transitional period” when it comes to recovery. In spite of this, operator calendars are getting busier, and Plaxton is looking forward to a successful year as the industry starts to recover and “full coaches return to destinations all across the UK.” Adds Mr Wood: “There is still uncertainty. People need to get the confidence back to travel on vehicles as well.”
In spite of SMMT’s statistics, one supplier to identify a slight improvement over 2020 registrations is Irizar UK. Managing Director Andrew Blundell and Sales Director Julie Hartley reveal that 2021 industry-wide registrations included 362 coaches, up from 320 in 2020.
“We had a flurry of activity in terms of orders being placed for this year up to the end of November,” Mrs Hartley reveals. “Then with the rise of Omicron, people started to sit on their hands and through January that carried on. Within the last three to four weeks we’ve started to see the confidence coming back. Late February seems to have been quite busy with enquiries and orders taken.”
For Irizar UK, there is now confidence that fleet replacement is due, owing to the length of time since many operators last upgraded. “We sense a degree of commercial caution at the moment that operators have been hanging on to see how this pans out,” explains Mr Blundell. “But many operators in conversation are suggesting they have healthy bookings moving forward. Hopefully that is a very strong sign that the industry will bounce back and with the ending now of the COVID-19 restrictions we are almost sensing a spring surge.”
That brings on the question of how the previous 24 months and the reduction in vehicle production will affect supply and demand. “For the last 24 months there has been an oversupply of vehicles against reduced demand, and now we might see the reverse, with healthy demand and automotive supply chain challenges,” Mr Blundell adds. “That could firm up values on new coaches and on used vehicles.”
According to Mr Blundell, an ongoing concern is around the timetable moving into 2022, and the risk of delayed actions: “If operators continue to wait and see, then before long the season will have vanished. We will be in August, and operators will be thinking about 2023. There is still a degree of uncertainty over how 2022 will pan out in terms of volume.”
More enquiries, more orders?
As with the other dealers, vehicles equipped for PSVAR compliance are still the strongest demand that BASE is seeing from operators, and Mr Dodgson also highlights the lack of clarity that is ongoing from central government around this issue. He argues that resolving PSVAR would boost confidence in investment: “Operators and local authorities are having to take decisions into their own hands.
“We are seeing with some local authority tenders that customers have shown us that the councils are making the decision for them, and only asking for quotes with PSVAR-compliant vehicles.
“Other operators have said they can’t risk acquiring a vehicle that isn’t Euro VI or PSVAR. And 90% of the used vehicles we sold last year had been converted to PSVAR.”
Lending situation delicate
There is consensus among all dealers that the lending sector continues to recover tentatively.
Mr Dodgson reveals that while some lenders have returned to the sector, there is little negotiation for lease options, and hesitancy remains over having residuals on financiers’ books.
But there is some sign of growing confidence, according to Mr Wood, as residuals begin to recover. Mr Blundell says Irizar UK has seen a “bottleneck” when it comes to lenders, where a significant degree of caution still exists around the impact of recent events on residual values.
Adds Mrs Hartley: “There is definitely a sense that the financiers want to know the inside leg measurement now, whereas before they just needed the collar size.”