Rental demand grows as lessees turn away
from buying assets. Antonio Fabrizio reports
The bus and coach sector has
suffered less than the rest of the wheeled industry, although
experts remain cautious about the sector’s’s future.
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Registrations of buses and coaches in the UK
decreased in March year-on-year by 23 percent, according to the
latest figures from the Society of Motor Manufacturers (SMMT).
However, there was an even sharper decline in registrations for the
truck, van and car sectors.
Furthermore, while the number of coach
registrations declined by 35 percent over the past year, they
actually grew by 42 percent for those coaches weighing above 8.5
tonnes. Double deckers also saw a growth in registrations.
The industry, however, faces a more uncertain
future as, according to SMMT chief executive Paul Everitt most of
these registrations relate to orders made last year – buses and
coaches can have long lead times.
Now, however, the recession is “beginning to
bite” and this is expected to result in fewer orders and a sharp
dip in the number of registrations over coming months, he said.
Rob Hallworth, head of the bus and coach
division at Alliance & Leicester (A&L), one of the main UK
companies specialising in bus and coach leasing, shares Everitt’s
cautious view.
He foresees a slowdown in future orders for
manufacturers, particularly for new buses from the larger bus
groups, which “will impact on output levels during late 2009 and
into 2010”.
This is also seen among leasing companies,
with several lessors showing a reduced appetite for these
assets.
It is not all bad news, though. Hallworth
believes the sector is showing “more resilience” to the market
downturn as British tourists prefer to travel in the UK instead of
moving across Europe, and rely much more on buses and coaches for
their transport needs.
Furthermore, although lessees have less
capital investment potential, they are still happy to rent buses
and coaches – something which A&L does – as well as lease these
assets.
The fact, however, that lessees are less keen
today on buying buses represents quite a seismic shift.
After all, according to Alan Rhodes, the sales
and marketing director at Scania Financial Services, the UK captive
arm of the Swedish CV manufacturer, large bus companies tend to pay
cash for the vehicles. Historically this has kept penetration
levels in the bus sector for the captive fairly low.
For coaches the situation is the reverse, with
lease penetration traditionally having been high.
For instance, half of Scania’s coaches are
leased, a comparatively high penetration rate. Oddly, the opposite
is the case at A&L where three-quarters of its bus and coach
portfolio is made up of buses.
Despite general customer caution, however, key
leasing players in this market remain very much open for
business.
