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Reading: Coaches are shaping up for another good year
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routeone > Vehicles > Coaches are shaping up for another good year
Vehicles

Coaches are shaping up for another good year

routeone Team
routeone Team
Published: January 18, 2017
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Registration figures for new coaches are on a roll, with two strong years set to become three in 2017

Scania says 2016’s strong retail coach market is set to continue into 2017

The market for new vehicles is a good barometer of the coaching sector’s health. routeone speaks to many manufacturers, and – perhaps surprisingly – their predictions for 2017 are unanimously positive, with talk of strong demand and bulging order books.

There are several reasons for this level of buoyancy, which has overflowed from 2015 and 2016, although 2019 or 2020 may see a slow-down once London’s Ultra Low Emission Zone (ULEZ) is in force.

“My informed opinion is that 2016 saw around 900 new coach registrations, with at least 600 of them going to retail buyers,” says Scania Bus and Coach General Manager Retail Sales Martin West.

“We have seen a doubling of new retail coach buyers in five years. The market remains price-focused, and recently more operators have taken new coaches where previously they may have gone for used.

“Most deals are for the most attractively-priced coach available that will do the work that the buyer has, and I estimate that 80% of retail purchasers want a coach that is as versatile as possible.

“Of course, there remains a call for high-spec coaches, or high capacity, but the majority of the market requires vehicles that come with a generous trim level, look good and are priced keenly.

“I expect that to remain the case in 2017, as demonstrated by the interest in our Interlink. Arrival of new manufacturers has driven established names to keep prices competitive and that will continue to make it a buyer’s market.”

The crystal ball…

Like all major manufacturers, Scania must plan yearly production schedules far in advance. While some slots are for stock coaches, it can make a reasonably accurate prediction for the year ahead.

“Orders for 2017 are slightly ahead of where they were in 2015 and 2016 and I expect that numbers will be good this year,” says Mr West.

That’s not necessarily because coaching in general is in a great place. Exchange rate woes make holidays here more attractive both for overseas visitors and UK natives, but there are two elephants in the room: London’s ULEZ, and the increased prices of coaches because of Sterling’s weakness.

Manufacturers are doing their best to mitigate the latter. “We have tried to keep 2017’s rise at around the same level that we would see anyway, because there has got to be a level of consistency for operators’ planning purposes,” adds Mr West.

“To further soften price increases we have introduced other initiatives, including fleet management, training and repair and maintenance packages. They add value.”

Interestingly, he predicts a semi-renaissance of two-axle coaches this year, potentially driven by manufacturers’ efforts to reduce unladen weights.

“Tri-axle coaches have dominated our recent order book, but in 2017 two-axle models look strong. For example, one of our customers has moved from taking a mix to ordering only two-axle chassis, although the success of our Interlink influences the figures; most of them are coming in two-axle form.”

Whole package is increasingly as important as the coach, say operators

Accessibility is king

Mr West says that taking coaches on operating leases is increasingly popular. In 2016, 20% of the new coaches supplied by Scania Great Britain came on operating lease deals, something that will continue in 2017.

An operating lease is an initially fixed-term deal. The operator pays a deposit and then a set figure per month, and Mr West says that it allows good financial forward planning.

“An operating lease is very flexible. At the end of the term the operator can buy the coach outright, extend the leasing period, or give it back to the supplier and, if required, take a new one.

“The latter is particularly useful when working for tour companies that specify an age limit, for example.

“Of our forward orders for 2017, around 20% will be supplied on operating leases. They can offer incredible value to eligible operators; we can do a new Touring from less than £3,000 per month, for example.”

Such purchasing strategies, and others, are becoming more prevalent among retail coach buyers, says Mr West.

Many are adopting a more fleet-like mentality, and with the London ULEZ an underlying market driver he expects the current market buoyancy to continue in the short term.

“I see no reason why 2018 or 2019 will be any different from 2016 or 2017. Manufacturers work hard to make a new coach an attractive purchase, and the warranty coverage and peace-of-mind benefits are obvious.”

Scania operating lease information at bit.ly/2iZLGG4

routeone comment

Although there is an underlying influence in the form of London’s ULEZ, it is good to hear that despite some perceived threats to the coach industry it continues to invest in new vehicles.

While some of this is driven by the entry of lower-cost models to the marketplace, established manufacturers are working hard to improve their offerings.

That’s shown elsewhere, where a director of a smaller operator points out that the whole package is now as important as the vehicle.

There have been few better times to buy.

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