Bus / Coach Expansion: A Cost-saving Guide

If you are facing, with enthusiasm, a potential expansion of your bus or coach fleet then this is probably an exciting time for you.

There is no way that we at ACF Direct would wish to dampen that enthusiasm! However, it is important to keep in mind that in such business scenarios, cost is likely to be an issue of one sort or another.

That is why we have prepared here a quick overview touching on some points that might help save money when you are considering bus and coach finance and expansion.

Get a third party to review your volume and income projections

It is important that you build your fleet based on long-view figures you are relatively sure of rather than ones that have their origin in a short-term and unrepresentative peak in demand.

That’s something it can be difficult to be objective about and why an unbiased third party’s review can sometimes be useful. Essentially, the objective here is to:

  • be sure that the factors driving your expansion are likely to be ongoing;
  • if there is uncertainty in that respect, to potentially outline alternative ways of meeting a peak in short to medium term demand without spending lots of money purchasing new vehicles outright.

This hard analysis will provide the bedrock upon which your assessment of appropriate financing options might be based.

Choose financing options linked to your specific circumstances

Ignoring very short-term rentals, you may be facing three main options for financing a significant expansion of your bus and coach fleet:

  • hire purchase;
  • operating lease;
  • finance lease.

It isn’t really possible to make specific observations about the suitability of each of these three options until such time as we have had the opportunity to look a little more closely at your business expansion plans. Broadly speaking, hire purchase results in the vehicle becoming your property after a period of time and therefore adding to your company’s asset base.

That’s fine but if there is any uncertainty about your forward projections, you may prefer one of the leasing options.

Choosing the right finance and its associated costs is important if you are to get the most cost-effective bus and coach expansion.

Drive a hard deal with the vehicle providers

Buses and coaches are expensive vehicles and purchasing or leasing them involves spending significant sums.

However, it is tough out there for vehicle providers. That means you should be very “bargain-minded” when talking about prices with vehicle suppliers.

Examine your options for purchasing pre-used

Nobody is seriously suggesting that you buy a second-hand bus or coach with a future that is now securely behind it!

What may be worth looking at though are vehicles that are only a few months old and with very limited mileages. They may be very significantly cheaper than a brand-new vehicle and still retain all the advantages of one that has come fresh out of the showroom.

Note that not all finance options will necessarily permit you to look at anything other than a new vehicle. Please discuss this with us to find out more.

Look at vehicles that are a close average match to your passenger projections

If you are an experienced operator, you are probably aware that in some cases, you have insufficient seating capacity on a given vehicle whilst in others, large amounts of surplus space is going unutilised.

This is a complex logistical and commercial equation but a key message here is to be cautious about buying the very biggest (and typically most expensive) coaches and buses on the assumption that the cost will be recoverable on a cost-per-vehicle-hire basis.

Some customers may simply not pay for a very large vehicle if their requirement is actually for one only half its size.

This is all about trying to avoid selecting the largest vehicles based on only occasional requirements for such.