Volvo and Alexander Dennis bosses warn operators that price increases are inevitable following post-referendum decline in the value of Sterling

 

potteries_busesA £1.3m fleet of eight brand new ADL Enviro200 buses entered service with First Potteries in October

 

Bus manufacturers have warned that the slump in value of Sterling that followed June’s vote to leave the European Union will soon see Britain’s bus operators paying higher prices for buses.

Since the referendum vote on June 23, market concerns about Brexit have seen the value of the pound fall 14% against the Euro. Speaking to the press last week ahead of the Euro Bus Expo show at the Birmingham NEC, Volvo Bus UK managing director Nick Page said that this had not yet affected the price of bus chassis imported by his company to the UK, but added: “At some stage it will hit.”

His comments were echoed by Colin Robertson, CEO of the UK’s largest bus manufacturer, Alexander Dennis Limited, which imports high value components like gearboxes and axles from suppliers in the EU.

“A series of currency hedges will help to shield our customers from the brunt of this exposure in the short term, however unless there is significant and consistent recovery in the value of sterling, some price adjustment will be likely next year,” said Robertson.

“Whilst we are working as hard as we can to find ways to offset these cost increases, it is inevitable that, regrettably, we will have to increase prices.”

Bus operators are not delaying their investment plans. Volvo has seen customers ordering vehicles early, perhaps anticipating possible effects next year.

“We have a very strong order book,” said Page. “It has not been the Armageddon we expected but there will be an impact.”

Even a 5%-10% increase in the cost of new buses would see the UK bus industry paying many millions more each year to maintain current levels of investment. However, one bus manufacturing expert warned that a much bigger impact could follow if tariffs are imposed. “If it becomes ‘hard Brexit’ that could be really quite worrying,” he told Passenger Transport.

 

This article appears inside the latest issue of Passenger Transport.

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