Safety effort drives sales for school bus makers

BEIJING - Growing government and public attention to school bus safety is giving makers of these vehicles the confidence to expand.

Zhengzhou Yutong Bus Co Ltd, the largest professional bus maker in China by sales volume, believes there is great promise in the market. The company plans to increase production of school buses in response to rising orders.

"We witnessed a certain increase in orders for school buses after the (accident) in Gansu province on Nov 16, which killed 21 people, including 19 preschoolers," said Zhang Qiang, general manager of the school bus department of Yutong.

"I think in the next three years, the school bus market in China will see significant growth with the government's moves to regulate the industry," Zhang said.

The company sold 200 school buses in 2009. It expects sales to double this year from last year's total of 600 to 700.

Yutong is not alone in its view of the sector's potential.

"We have seen explosive growth in orders for school buses in recent days. For the year to date, sales of school buses stand at about 2,000," said Duan Yongjun, general manager of the marketing department of Baoding Chang'an Bus Manufacturing Co Ltd, a subsidiary of the Chongqing-based Chang'an Automobile Group.

Chang'an entered the school bus field in 2007 and has since sold almost 3,000 vehicles domestically, with exports exceeding 1,500. Its export destinations include the Middle East and South America.

Zhengzhou-based Yutong began research and development into school buses in 2005 and has produced more than 10 models. Four of those models are US-style long-nose school coaches, a type of bus thought to offer better protection to the driver and front-row passengers in a crash.

Yutong's buses have 19 to 64 seats, with prices starting at more than 100,000 yuan ($15,748) and running up to 500,000 yuan.

Premier Wen Jiabao vowed on Sunday to accelerate the establishment of standards for school bus design and production and urged relevant departments of the State Council to "rapidly" formulate safety regulations.

The central and local governments will share the costs of providing more buses that meet safety requirements, Wen said.

Buyers of Yutong's buses are mostly schools, said Zhang. "But orders from local governments have been moderately increasing in recent days, and I think it's a trend" driven by the accident in Gansu and Wen's comments.

"Most of our clients are schools and bus rental companies, almost no local governments," Duan said.

"The biggest obstacle for our development in the school bus sector is the lack of legislation, regulations and supervision nationwide," he added.

"Many buses not specially designed for students are being used to carry children, which inevitably hurts our business by taking away our potential customers," he said.

Yutong and Chang'an plan to emphasize the quality and technology of their school buses to improve safety records.

"The total number of school buses - including the illegally fitted ones - in China is rather small compared with market demand, which makes it a market of great potential," said Xu Changming, director of the State Information Center under the National Development and Reform Commission.

The government released official safety and technology requirements for school buses last year, which took effect on July 1.

According to a survey by the Ministry of Education, there are 285,000 vehicles carrying 180 million primary- and middle-school students nationwide, but only 29,000 vehicles, or 10.3 percent, meet the safety requirements.

Xu said that companies with experience in producing school buses will have an advantage over newcomers when it comes to business growth.