Bus sales on the rise despite opinions to the contrary

Frank DiGiacomo, Publisher
Posted on December 1, 2002

Although the full recovery of the U.S. economy is still in the offing, North American school bus sales rebounded during sales year 2002 (Nov. 1, 2001, to Oct. 31, 2002), with a 4 percent increase over the same period in 2000-01 (see School Bus Sales chart).

That's a surprise to many suppliers and operators in the school bus industry. The conventional wisdom was that 2002 bus sales in the United States and Canada would show another decline, perhaps larger than the previous year's 11.8 percent drop.

It should be noted that sales figures are collected directly from the bus manufacturers themselves and doublechecked with subcomponent manufacturers. Although the perception of each manufacturer may be that 2002 was a down year, their numbers say otherwise. Please don't shoot the messenger.

Why the spurt in buying?
So where did this rebound come from?

If you look at the sales figures, you'll see that the growth was reported in the Type A/B and Type C categories. The conventional bus (Type C) was the strongest performer, with a nearly 10 percent increase in unit sales. Small buses (Type A and B) were also in greater demand, with a 3.4 percent hike.

It's not surprising that conventional buses were a strong performer. The workhorse of the industry, the Type C bus has benefited from design improvements over the past few years. Improved visibility and ergonomics for the driver are complemented by a lower unit price than the larger Type D (transit-style) buses.

Higher sales of Type A/B buses (in our survey this category includes activity buses) were not unexpected either, especially since Head Start programs are now required to buy only school buses when new vehicles are needed for transportation.

That answers the question of which buses were responsible for the growth, but not why school districts and contractors bought more buses during this continuing economic slump.

The best answer is that continuing growth in the K-12 population has forced school districts to expand their transportation service, even in the face of austere budgets. Enrollment for grades K-12 is on the rise and is expected to continue to move upward for the next several years.

The supplier perspective
One manufacturer believes that the worst is yet to come. He says 2003 will be the "trough" of the bus sales cycle. As you're aware, the industry is cyclical, with long periods of healthy sales interrupted by a short slump. The last slump occurred during the recession of the early 1990s, and was followed by several years of expansion. If 2003 is the trough, then a return to robust sales would be expected in 2004.

For my part, I expect the numbers in 2003 will stay pretty close to those of 2002. Much will depend on the state of the economy, but a dramatic shift in either direction is unlikely.

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