Is the global bus and coach market on the road to recovery?

Since 2016 the global bus and coach market has recorded five consecutive years of year-on-year (YoY) decline in new sales. However, barring any major shocks, this looks set to change in 2022 as the market is expected to show annual growth for the first time in half a decade. Full-year sales are expected to surpass 250k units, which would mark a 12% increase from the previous year and demonstrate that annual sales have exceeded a quarter of a million units for the first time since 2019. So, is the global bus and coach market finally on the road to recovery?

While the expected annual growth is welcome news for the industry, sales remain a long way off levels seen before 2019 (~30% lower) and even further behind the record highs registered in 2016 (approximately 40% down).

The chart below illustrates how sales have fallen since 2016, with a ‘cliff-edge’ drop noticeable from March 2020 onwards, as the selling rate slumped from 359k units/year in Q4 2019 to 224k units/year by Q2 2020.

Unsurprisingly, the main cause of the declines (since 2019) has been the impact of COVID-19, and the related containment measures which paralysed the industry, namely ridership and confidence levels. While the effects of COVID-19 on the entire automotive industry have been unprecedented, the bus and coach industry has been hit hardest and for the longest, compared with other forms of vehicle transport (see chart below):

Though COVID-19 has not been the only factor which has disrupted the automotive industry over the last few years, it has by and large been the most significant factor for the bus and coach industry.

However, there has been a high degree of variation by region as well as by application type. For example, sales in Asia-Pacific remain around 40% below pre-COVID-19 levels, while in Europe they have recovered to around 80-90% of levels (see chart below).

One reason why sales in Asia-Pacific have remained significantly lower than in other regions is weak demand and confidence levels in the world’s largest bus and coach market (China) distorting the regional picture. The Chinese market has been one of the hardest hit, not helped by the country’s zero COVID-19 policy which has continued to lead to curbs in public transport, travel restrictions and supply constraints.

Outside of China, the situation has improved somewhat; higher vaccination rates, coupled with more relaxed measures in dealing with COVID-19 – such as the reopening of schools, public transport, international borders and offices etc. have boosted bus utilisation rates and confidence levels. As a result, OEMs have reported greater incoming orders, although from underlying low levels. So, there are signs that the bus and coach market is on the road to recovery.

However, there remain several downside risks: including COVID-19 (and subsequent lockdown measures – particularly in China), ongoing supply chain bottlenecks, and the continued global economic impact of the Ukraine/Russia war. The latter particularly impacts rising fuel and material costs.

Considering all of this, we remain cautious about how quickly the bus and coach market can recover and while there are positive signs that it is on the road to better times, we do not expect this to happen overnight…