When purchasing a coach or bus, there is more than one way to pay for it. If finance or rental is on your radar, it may be worth speaking to Mistral, which specialises in both areas and knows the industry well
Buying vehicles is part and parcel of the coach and bus industry, and funding them is a game of choices for the operator.
While a stable, cash-rich business may elect to pay upfront, rental or finance agreements allow a more effective overall use of cash. That is where Mistral comes in.
Mistral has traditionally operated as two businesses. Mistral Asset Finance does what it says: It offers finance on coaches and buses. Mistral Bus and Coach, meanwhile, rents them for periods of up to 10 years.
Both companies are now more closely aligned than ever. “They essentially carry out the same type of transaction,” says Mistral Group Managing Director Steve Low.
“How we differentiate is simple. On the Bus and Coach side, we own the vehicle. On the Asset Finance side, it sits on the operator’s balance sheet.”
Sales and support staff are shared across both Mistral businesses. The Asset Finance arm can fund almost any coach or bus, new or used, and the Bus and Coach side focuses on renting vehicles from the Alexander Dennis (ADL) stable, including Plaxton.
“Our primary partner is ADL and we work closely with its retail sales team,” says Steve. “If an operator wants to rent an ADL or a Plaxton, the enquiry will be passed to us, and if funding is required, we can introduce the Asset Finance aspect as well.”
The benefits are…
Why should an operator choose finance or rental? Because it’s not always efficient to write a cheque, says Mistral Asset Finance Chief Operating Officer Guy Wadsworth.
“It ties up a large amount of capital, whereas with finance or rental the money can be put to work funding a number of additional vehicles.”
ADL and Plaxton’s full range, from the smallest Enviro200 to the largest coach, can be supplied on finance or under rental by Mistral, and with much of its business done with retail customers, it can still offer Euro 5 Enviro200s.
“An operator can order a Euro 6 Enviro200 MMC through us, but the retail market remains centred on Euro 5,” says Steve.
Mistral has staff based at Plaxton’s North Anston premises and it enjoys a good relationship with ADL. If a customer wants to rent a vehicle that ADL cannot supply, Mistral Bus and Coach will look at sourcing from other manufacturers, as it has done with a number of Yutong TC9s and TC12s for a specific contract with an existing customer.
A major part of Mistral’s rental set-up is its flexibility. If a deal is for a fixed period to suit a contract, it can be extended if the tender is renewed but a new vehicle is not justified.
Equally, if an emergency contract is won and a vehicle is required rapidly, Mistral can accommodate that. It can also take a vehicle that is part way through a rental agreement and transfer it to Asset Finance if the operator decides to buy it outright.
Coach rental has become prominent over the last year, says Steve. Previously, operators’ preference was to buy, but they are becoming more aware of funding options. Mistral expects that to be a growing trend going forward.
Financial times
Mistral Asset Finance funds almost any coach or bus. Once the operator pays the finance agreement, the vehicle becomes its property.
“We offer on-book lending – using our own money – and we also have a panel of lenders. We would be the broker in the latter relationship,” says Guy.
“On-book lending allows us to look at financing vehicles that are coming from another operator, rather than a dealer or manufacturer. In the former case, some lenders may be put off, so we can do what we see as unique deals on finance.
“Because of our broad lending base, we should be able to find the ideal home for any deal.” That includes older, lower-value buses such as school double-deckers.
Using Mistral, adds Guy, gives the operator the benefit of its experience in the coach and bus sector. It is familiar with the industry and it has knowledge of residual values. That allows it to accurately calculate the risk involved, and offer the best rate.
On the other foot
Significantly for operators, banks are coming under pressure from the government to lend money, and they see PCVs as good assets.
“Coaches and buses are desirable from a funders’ point of view. If the operator’s business is a viable one, there should be no situation where we cannot source finance for it,” says Guy. “Confidence is growing, and from an operator’s point of view, that’s good news.”
Low interest rates are available, but to finance an asset at the best rate companies like Mistral need to know as much about the operator’s business as possible.
“We get an understanding of its credit requirements, it balance sheet and what it needs. If we have good information to begin with then we can pair the customer with the right funder,” says Guy.
“Being able to do that revolves around understanding the customer. The more we know, the better the deal.”
