China bus sales

David Leah, Senior Analyst

06 May 2021

Has the Chinese bus market bottomed out?

In 2016, almost 190,000 new buses (>7m length) were sold in China – the highest level on record. Fast-forward four years and sales slumped to 104,000 units in 2020, marking the fourth consecutive year of decline.

While the drop in bus sales in 2020 was exacerbated by the impact of COVID-19, the quadrupling of year-on-year contractions begs the question: have Chinese bus sales peaked?

Perhaps the writing has been on the wall for some time, given that the decline in highway passenger traffic volumes has continued to widen for a number of years. Patronage has fallen as the threat of substitutes has risen, from the expansion of high-speed railway to the growing demand for private vehicle, shared and micro-mobility ownership in China.

That said, the aggressive subsidisation of New Energy Vehicles (NEV) played a huge part in the record highs of 2016 as many bus manufacturers took advantage of the generous subsidies and loopholes available before the rules were tightened in 2017 and plans were put in place to gradually phase out the NEV subsidy. This caused massive pre-buying in 2016 and in 2017, leaving many e-buses sitting idle and a long way from being scrapped.

On the flipside, rising urbanisation levels have continued to support the promotion of urban population mobility programmes, with large-scale public transport and infrastructure projects boosting demand for buses. In addition, the sustained emphasis on reducing emission levels by promoting zero-emission vehicles, mandating emission standards and scrappage schemes continues to drive replacement rates. Nor should we forget that China’s rising middle class and subsequent growing demand for domestic tourism should help drive demand for buses and coaches over the forecast horizon.