Bussing for market share

Usage of bus services has increased since 2010, but overall quality of public transportation in South Africa has not, causing FARZANA CHAUMOO, along with many others, to opt for private transport – leaving bus companies to fight it out for sales locally and across our borders.

South Africa has a relatively low average household income, yet a high rate of car ownership, with 109 cars owned for every 1 000 people. This is not as high as New York, however, which has 500 cars to every 1 000 people, but significantly higher than other African cities such as Lagos with 15 cars per 1 000 and Nairobi with 50 cars per 1 000.

With 32 percent of South Africans travelling in cars and 23 percent of the population only affording to walk, it leaves 25 percent of people travelling by minibus taxi, and eight and six percent of the population travelling by bus and train respectively. The remaining six percent travel by bicycle, animal-drawn vehicles and by other means.

The high cost of public transport and its poor quality are the main reasons for the high rate of private car ownership. The public transportation sector has been described as being in a state of crisis by the chairperson of the transport portfolio committee in parliament.

Complaints of security issues and overcrowding crop up on a daily basis. There are also the issues of infrequency of services during peak times, and especially the un-roadworthiness of a large number of the public transport vehicles.

More than half of all South African workers spend at least (if not more than) ten percent of their monthly income on public transport. While rail is the cheapest form in most urban areas, it is limited by reach, making taxi and bus services more commonly used. Over the last 20 years the minibus taxi sector has grown immensely with about 130 000 minibus taxis now in operation.

The bus sector has about a 19 percent share in the public passenger market and is largely in private hands. With 15 000 buses in operation, there are about 750 million passenger trips being made each year. Despite this, bus sales still dropped last year; from 1 071 buses sold in 2012, to roughly 900 sold in 2013.

Alexander Taftman, product development and marketing communications director at Scania, says that bus sales have a seasonal cycle. This year’s first quarter has also seen slow growth, with just 260 buses being sold locally, leaving manufacturers to explore other options, particularly that of exporting.

The Scania buses are assembled in South Africa using components imported from Sweden. Over and above its sales in the South African market, Scania exports buses to seven other African countries: Tanzania, Zambia, Malawi, Zimbabwe, Botswana, Namibia and Mozambique. Taftman mentions that the current volumes distributed through Africa seem to be virtually equivalent to local bus sales.

Luxury coach maker and market leader in Spain, Irizar, is commercially active in 71 countries. Irizar coaches are imported into South Africa, making it a hub for the southern African region. Irizar buses are exported from South Africa to countries including: Namibia, Botswana, Zambia, Zimbabwe, Malawi and Tanzania. According to Paul Nel, director at Irizar South Africa, the company finds it very feasible to export to other African countries, as demand for its coaches is increasing.

Nel says that it is not an option for Irizar to assemble coaches locally as the number of units sold per annum simply does not justify the investment. As export sales can be influenced by many different factors, especially the exchange rate, overall profitability can be difficult to calculate at a single point in time. Irizar sales have shown a steady growth over the years. Coaches sold locally still exceed the sales through exports to other African countries.

According to TATA, South Africa’s bus market is dominated by bus bodies that are built onto truck chassis, but the Indian company offers buses that are built on dedicated bus chassis.

TATA imports buses from India to South Africa. It then exports to countries including: Botswana, Namibia, Zimbabwe, Zambia and Malawi. Braam Walters from TATA SA notes that, at present, the local bus market is more profitable than the export market to these countries.

TATA buses are best described as reliable and durable utility buses and hence the reason the company does not target the tourism industry. The buses were designed to function in the tough operating conditions found in countries like India and South Africa.

The bus industry is a very small one, and there is strong competition among manufacturers in the South African and African markets. While future strategies and plans to improve sales in the bus market are kept firmly under wraps, it will be interesting to see how events unfold in this small, but significant, industry.

*Farzana Chaumoo is the 2014 South African Guild of Motoring Journalists’ bursar programme recipient. She recently spent a month with FOCUS where she was exposed to the world of transport journalism.