Global bus market will see double-digit growth in the next 3 years

The global bus market (>6t, excluding motor homes) will grow 14% y/y in 2021, after the tremendous decline it had witnessed in 2020 (down 35% y/y to 255,000 units). Daily commuting declined as people worked primarily from home and some avoided public transport fearing infection in crowded spaces. City Bus figures for 2020 are expected to have declined 33% y/y because of this reason. Coaches declined even further as tourism season was short, long-distance line services were partly suspended and travel restrictions kept people at home or changed to individual transport. Looking at regional developments, Europe and North America declined 16% y/y, Japan/Korea, South America, Greater China, and Middle East & Africa went down 31-36% y/y, and a dramatic 62% y/y downturn was seen in South Asia. Developments in buses are more aligned across the regions than trucks and China is in sync with the other regions for the general upside/downside trends.

As vaccinations have started, countries are expected to exit lockdowns over spring and summer and demand for bus services is expected to increase again. The global bus market is forecast to rise by 19% y/y to 280,000 units. Regions that experienced the highest declines in 2020 will see the biggest growth rates in 2021. Overall, the volume will still be down by 23% y/y on the 2019 figures.

The recovery will take a couple of years as the behaviors we have adopted during the pandemic will take time to change and we have to re-gain our sense of safety when commuting on city buses or travelling on long distance coaches. By 2023, the market will outdo 2019 levels and take another four years to cross the former peaks of 400,000 units.

In Europe, several markets (Czech Republic, Germany, Netherlands, Sweden, Turkey) showed improvement over 2019 confirming that tenders agreed upon before the health crisis were delivered and will continue to do so in the current year. City buses hold up well during 2020, only declining 7% y/y and will grow at 10% annually from 2021 to 2023 as replacement with electric vehicles is ongoing as set by the EU Clean Vehicles Directive. Coaches saw a significant drop in 2020 (down 36% y/y) and will gain in 2021 especially as the segment is increasing in Russia and Turkey.

In China, bus demand was driven over the past years by New Energy Vehicle (NEV) subsidies. In 2019, bus sales were hurt by the NEV subsidy reduction and the weakening economy. Another drop of 27% y/y to 104,00 units is expected for 2020 (final numbers will be available in our Q2 release), before recovery starts with 11% y/y in 2021 fostered by the government's 2021-35 NEV industry development plan issued in late 2020. The plan urges NEV penetration in the public transport sector to reach 80% in key regions starting in 2021 and 100% across the nation by 2035.

The South Asian region with its biggest market India has been the most negatively impacted country and region in 2020, down 67% y/y and 62% y/y respectively, as state governments across India had to stop public transport in order to mitigate the spread. For almost an entire quarter of the year, buses were not on Indian roads. For 2020, the bus market in India is estimated at 19,000 units while in 2021, it will reach 27,700 units. Further increases are expected as the Indian government sets up public transport initiatives to renew and modernize the fleet and sets up more Bus Rapid Transport (BRT) corridors.

Around 80% of the North American (US & Canada) bus market consists of the school bus segment, while city buses only take 15% and coaches 5%. All segments declined in 2020 and the market is expected to increase by 10% y/y in 2021. School buses should recover with the end of home schooling in the summer and register 31,500 units. City buses and coaches will take longer as people move outside of cities and plan to do more working from home than pre-pandemic.

For South America, we expect a recovery to 2018 levels for this year (30,500 units) and a 25% increase in 2022 as the major country in the region (Brazil) is expected to adopt Euro VI in 2023.

Overall, these demand figures also drive the production of buses around the globe and we expect the bus output to increase from 246,000 units in 2020 to 285,000 units in 2021 (up 16% y/y) and to 337,000 units in 2022 (up 18% y/y). In the following years, bus production will grow at a slower rate and reach its former peak of 2016 in 2028 (422,000 units).

In this period, we will also see the penetration of electric and hydrogen buses rise: 25% of the global bus production will be electric, 3% will use hydrogen, 4% natural gas and 63% will remain Diesel. In China, nearly two thirds of the output will feature an alternative driveline.

Posted 11 February 2021 by Christiane Stein, Associate Director, Global Heavy Truck Research, S&P Global Mobility