Influences driving global growth of transit bus industries.
Photo credit: Illustration courtesy of Frost & Sullivan
As the rate of urbanization increases year-over-year globally, cities are increasingly becoming crowded, creating pressure for cities’ infrastructure. Urban traffic congestion is leading to further air degradation, creating critical issues for governments. This is because environmental concerns will necessitate huge investments in order to improve the infrastructure in cities.
Countries’ dependency on fuel imports combined with volatile fuel prices and increasing reliance on conventional fuel will make funding these projects a huge challenge, particularly with the current and foreseeable global economic outlook.
Issues relating to urbanization and public transit will become key priorities to solve for governments and businesses in order to sustain meaningful and all-encompassing growth. The transportation industry, especially the transit bus industry, will have to adapt to newer powertrain systems and other advanced technologies - such as connectivity, hub-and-spoke multi-modal urban mobility, among others - to enable sustainable and economical passenger mobility.
Transit bus industries globally will experience noticeable growth as transit buses will be increasingly viewed as a cost-effective, easy way to meet urban mobility challenges. Between 2012 and 2020, the global heavy duty (HD) transit bus industry is expected to grow at a compound annual growth rate (CAGR) of 6.4 percent and account for 278,000 unit shipments by the end of that period.
If there is an increase in connectivity and frequency of transit buses while still running on conventional fuels, such as diesel and gasoline, the transit bus ecosystem will become more unsustainable, as it will be exposed to fuel price volatility. Any increase in ticket prices related to the increase in fuel costs will likely negatively affect the amount of people using transit buses.
Advanced powertrains, such as hybrid and electric (H&E) drives for transit buses, have already experienced rising proliferation as cities all over the world are starting to adopt these technologies to reduce emissions and fuel consumption. These green powertrain systems promise to improve fuel efficiency, helping to compensate for expected increases in fuel price and in ridership cost.
Though transit bus systems are an integral part of society in BRIC countries and other emerging economies, the success of transit bus systems in North America and Europe depends on change of public perception. Making transit buses appeal as an environmentally friendly, convenient and economical proposition can help bring in more ridership and can encourage a switch from personal to public transport.
The recent increase in growth of bus rapid transit systems in many American and Canadian cities shows that hub-and-spoke mass transit systems are being developed to solve urban mobility and in this scheme hybrid/electric buses will play an integral role.
A Global Phenomenon
Hybridization and electrification of powertrains is poised to become a global phenomenon in transit buses by 2020 driven by cash incentives, tax subsidiaries, stringent emission laws, regulations mandating green powertrains in transit buses for urban use and overall financial aid for green technology development.
Frost & Sullivan’s latest research focused on the global HD transit bus market indicates that sales of H&E buses will grow at a CAGR of 20.6 percent by 2020. It is estimated that global penetration of hybrid buses will reach 9.7 percent by 2020 and 5.7 percent for electric buses, reaching combined H&E transit bus unit shipments of close to 42,000 units.
China will lead global sales growth for H&E buses, accounting for every other new energy bus sold globally by 2020. Latin America is expected to emerge as the second biggest market for H&E transit buses and is likely to grow at 56.4 percent CAGR between 2012 and 2020.
North American Market
In North America, unit shipments of around 13,000 H&E transit buses can be expected between 2013 and 2020 at a CAGR of 13.7 percent.
Diesel powertrains are poised to lose market dominance in North America by 2020 and show a year-on-year negative growth from 2016. Research indicates that global average CNG/LNG costs are declining, which is posing strong competition for H&E transit buses, especially in North America.
On the other hand, Europe is expected to take pro-green measures, especially in the field of public transportation, although done under strain due to their sovereign debt crisis and stunted economic growth.
Bus fleet maintenance managers, as well as their truck market counterparts, will need to increasingly focus on non-diesel powertrain systems. The rising penetration of CNG/LNG and hybrid/electric powertrain systems will require proficiencies in servicing and maintaining batteries, advanced tanks and injection systems, traction motors, power and control electronic modules, and thermal systems. In addition to this, familiarity with H&E powertrain total cost of operation and ownership calculations will also be necessary.
Hybrid transit buses will be more visible in American and Canadian cities, and this is presenting electrifying opportunities for the original equipment and maintenance markets alike.
Wallace Lau is a senior research analyst for Frost & Sullivan’s Automotive & Transportation Commercial Vehicle research practice. Sandeep Kar is the group’s director. Frost & Sullivan (www.frost.com) works in collaboration with clients to leverage visionary innovation that addresses the global challenges and related growth opportunities that will make or break today’s market participants.