Domestic Bus Builder Eyes International Expansion

Q: What has AYCO identified as the principal needs of Mexico’s domestic bus market?

A: Mexico used to see bus sales of 9,000 or 10,000 units per year, but since the 2008 crisis, this has plummeted to just 5,000. Despite the economic situation recovering, the cheaper units remain the most popular. In terms of the parts that are made here, almost all plants handle a Mexican version of the semi-forward control chassis, with part of the engine inside the unit and part of it outside. This chassis takes up 80% of the market share, ahead of the flat front engine and the flat rear engine chassis. The quality of our bodies is related to technology, R&D, investment, processes, and materials. Through testing and analysis of durability and rollover, we have tried materials and just launched front semi-control and flat rear engine body models for all brands. These units are lighter by a tonne, when compared with previous versions. This means a more profitable unit, with greater fuel efficiency and less wear on tires. These aspects are important to the business of a transportation company. Although these units are not the cheapest in the market, they provide a good balance between price and quality. Our clients also know that delivery time is one of AYCO’s competitive advantages. If LIPU asks for 200 units in May to be ready before the next school period, we can provide them. Many customers also demand an after-sales service so we provide that service to all clients, even when they do not ask for it. This strategy has led us to have a market share of almost 60% with an annual production volume of 3,000 units. This translates to 15 units made per working day, which is no mean feat.

Q: How does the sophistication of the Mexican bus market compare with other Latin America countries?

A: The Colombian market, for example, is very mature. In cities such as Bogota, buses are the only other means of transportation apart from cars. There is no subway as the local geography does not allow it. Colombian public transport is also very clear as colors are prominently marked depending on the type of service the buses offer. The Mexican market also tends to be mature, but only in certain ways. The specifications are clear here too but, in some cases, a carrier may change the specifications, such as the color, lighting, or accessories, depending on the type of service they want to provide. This is possible because the sector is not regulated.

Q: What requirements does AYCO have to meet in order to do business with an OEM?

A: We have to comply with engineering requirements regarding how the body is coupled to the chassis. We need to prove our ability in the processes that validate when a body is appropriately installed onto a chassis without damaging any component. Each OEM has a guide for the bodybuilder with indications covering drilling, welding, and electrical systems. If we meet all these requirements, they approve the installation of the body on our chassis. Our plant has a pre-delivery inspection process that verifies if our chassis meets all needed engineering requirements. We have even shipped units to Detroit to be submitted for analysis of their product durability. This allowed us to determine that our chassis have a lifespan of 1.6 million km without damaging the structural integrity of the body. Most recently, in April, we took some units to Wisconsin to a lab where crash and rollover tests were performed. This means we can guarantee that our bodies are safe.

Q: What new opportunities has the current automotive investment boom brought to AYCO?

A: In the past, we had some applications for light interstate transportation but no opportunity materialized to participate more actively in that segment, due to a lack of chassis. Now Mexican manufacturers have the ability to produce chassis with certain characteristics, providing the capacity, comfort and power required for the interstate transportation segment. Chassis from Volkswagen, Mercedes-Benz, and Scania are all available, so we can participate in this segment. The industry has changed and AYCO has been invited to participate in other vehicle lines. There is a clear trend to modernize buses in Mexico and make them similar to those seen in Europe or the US. For instance, we have built an integral low-entrance unit that was developed by Man with the support of CONACYT. In 2015, we will participate more intensively in the light interstate sector, due to interest from several leading companies in offering complete vehicles for shorter distance travel.