Global focus for Optare
Registrations in the UK market in 2012 were up by 36 per cent, admittedly from a low base in 2011, and the company moved firmly into third place, albeit a long way behind Volvo and ADL. One of the reasons why its market share is under 10 per cent, compared to 25 and 38 for Volvo and ADL, is product range; it simply doesn't compete in some of the major sectors. The big one is double-deck and the company has teased journalists and the market for as many years as I can remember with promises of a forthcoming model. Deputy chief executive Glenn Saint firmly promises a new UK double-deck next year. Homologation work has already been done on a Euro 5, but clearly the model launch will await the onset of Euro 6. I can't tell you any details about it; none have been revealed yet. Saint says that it will not be a 'me-too' product, however, and it will be "very competitive in terms of price and weight". And to be fair, it will need to be with a new Enviro400 on the way and the NBfL from ADL and Wrightbus. Ashok Leyland supplies double-decks in some markets and won an order back in 2011 for 290 in Bangladesh, but at around £50,000 a bus, they would hardly be given house room in the new Optare manufacturing facility at Sherburn-in-Elmet.
Another new product which is somewhat further advanced is the MetroCity that was unveiled at last November's Euro Bus show. Two buses are being prepared for demonstration with London operators this year. The first will be a 10.6m with 5.8m wheelbase, followed by a shorter version at 9.9m with 5.1m wheelbase. Both will have Cummins 4-cylinder Euro 5 engines. A Mercedes option will be available although it may increase the rear overhang, which is 2.4m on the standard Cummins.
And in keeping with the new international outlook, there will be a left-hand drive demonstrator available soon, according to Saint.
Optare is also venturing back into small buses with the imported Bonito, to be officially launched next month. Still bearing the scars of the Alero fiasco in its previous guise, Optare insists that the new 16-seat offering is definitely not for bus operation. It is firmly resisting requests for destination equipment and the vehicle is to be targeted at dial-a-ride and community transport operations, not the much more demanding service bus sector. The Bonito is imported as a complete product from Netherlands manufacturer Plastisol. Optare has had some input on the design of the vehicle but is essentially just distributing the vehicle. Saint rebuts the idea that venturing back into small vehicles is a diversion from the main task, and claims that his sales team already has strong contacts within the local authority sector with its Solo. He says that the Bonito will be a much better fit for Optare's sales team than the previous small coach offering produced by Ferqui, and is optimistically predicting 30-50 vehicles in its first year.
On existing product lines there have also been developments including the longer Versa which was also on show at the NEC. The 11.7m offers 44 seats and has been ordered by Arriva and featured in the recently-announced First order which is split between nine 11m Versas and nine at 11.7m. The Versas represent a small part of the fleet order announced by First, but it is nonetheless an important milestone for Optare.
The group orders from Stagecoach, Arriva and First have been important to Optare, as Saint acknowledges that the UK market outlook is still challenging. He does not expect a bounce-back any time soon for the retail sector and points to access to finance for smaller operators as a key barrier to growth.
The forthcoming Euro 6 standard is not likely to give any impetus either, according to Saint, who accords with SMMT's analysis that the market is unlikely to place significant orders for derogated Euro 5 vehicles. "There is no strong pull for Euro 6, and no pull-back for Euro 5," says Saint.
In order to maintain throughput at the new factory, therefore, export growth is essential. Optare delivered 189 buses in kit form to Cape Town last year and is finishing off a further batch of 31. Saint says that the target is for 40 per cent of Optare's turnover to be from exports within a couple of years. That is a lot of buses, given the lower average price for exporting kit vehicles. And the agreement with South Africa will see an increasing level of localised content in future orders as they develop expertise, which could see Optare reverting to the supply of some key components as well as attracting a royalty payment for its design rights.
One of the important tenets of the new era for Optare is that brand is separate from product. Saint says: "What is built in this factory [Elmet] doesn't necessarily have to be delivered in this country". He is looking to leverage Ashok's financial muscle to open up new markets which could see an increasing element of Optare's structures being powered by Ashok group drivelines. Indeed two Solos are being supplied to Ashok's factory in UAE which will be Ashok-powered demonstrators.
Branding is about marketing, according to Saint; it depends which marque is stronger in the market being targeted. "Ashok is present in 33 different countries and every continent except North America," he says, "and a number of those markets have increased expectation of the product, which is where Optare can come in with its design expertise".
He points to tenders across the world which are being pursued by Ashok at present, for many of which UK-derived product may be applicable.
One of the innovations which Optare believes will help it on the global stage is plug-in electric buses. It has been working in this area for a number of years and now has a number of buses running with the latest ones in operation in Coventry. Saint is a firm believer in the future of electric vehicles and is hoping to gain from the latest round of Green Bus funding where the tiered grant structure provides additional incentives for full-electric vehicles, compared to diesel-electric hybrids.
Batteries have always been one of the challenges, but Saint is happy to promise that the latest models will last 8-9 years still delivering around 80 per cent capacity. He points out that the lithium ion chemistry being used benefits from regular top-up charging. The Coventry buses are generally staying above a minimum 40 per cent charge state with charges between the operating peaks and overnight. The service has a peak requirement of three vehicles, but only two are needed between the morning and evening peaks, so there is a pattern of rotating each one on charge during the middle of the day.
Saint points out that Optare's battery strategy is different to that being adopted elsewhere. Chinese electric buses are packed with batteries, giving them an impressive sounding range, but there is a penalty in terms of weight and therefore payload. In North America, there is more frequent charging to reduce the need for more battery power. Optare sits in the middle with 100kWh, according to Saint. The full electric bus is only around 500kg heavier; more battery power could be added to increase the range from the current 90 mile target, but that means less capacity for passengers.
But he points out that the electric bus system that has been developed could be adapted and given increased range with induction pad charging on the route, and also for trolleybus-style operation, something that is relevant in his local patch with the continuing obsession with re-introducing trolleys to Leeds.
The next couple of years will probably be no easier than the last few for Optare, but it does now have the support of a well-funded parent to support its growth. It is aiming to be less reliant on the UK market, and to keep its Yorkshire plant up to capacity there will need to be a wide variety of models emerging from the factory gates with plenty of overseas address labels. n