Global Coach Sales, a 2-month-old company that recently purchased more than 300 pre-owned motorcoaches from bus manufacturer MCI, already is billing itself as the nation’s largest used coach dealer.
The Nashville-based company, which is owned by private equity firm Atlys Capital, said it is looking to purchase more used motorcoaches from all industry sources — including operators, banks and manufacturers — with plans to hold them until the coronavirus pandemic subsides and buses start rolling again before reselling and leasing them.
“We have all the confidence that travel will return and buses will be on the road again soon,” said Roger Johnson, a partner at Atlys Capital. “Global Coach Sales wishes to serve the motorcoach industry by providing quality late-model pre-owned coaches with financing so operators can provide a high-quality, safe product to the consumer.”
‘Difficult’ market
Global was created in October when Atlys Capital agreed to purchase most of MCI’s inventory of pre-owned coaches that had been traded in by operators buying new motorcoaches. They include a mix of model years, with most of them being newer coaches.
Since the pandemic all but shut down the motorcoach industry in March, sales of both new and used buses have slowed considerably, and even more used buses are expected to hit the market in the coming months as struggling operators downsize and lenders repossess coaches. The depressed resale market for used buses contributed to MCI’s decision to sell its pre-owned inventory to Global Coach Sales.
“We were nearing capacity between new and used units and this will allow us to free up space and focus on our primary business, which is selling new coaches,” Brent Maitland, MCI’s Vice President for Private Sector Sales and Marketing, said at the time of the sale. “And we will no longer have to deal with those used coaches in a market that has been difficult.”
MCI also consolidated its sales teams, shifting sales of both new and pre-owned coaches to its new-coach salespeople.
Two former members of MCI’s pre-owned coach sales team, Brian Lichter and Brian Hill, have been hired by Global as executives. Lichter most recently was Executive Director of MCI’s pre-owned coach division, and Hill was the company’s South-Central pre-owned sales representative.
Beyond making money
While it may seem risky for a company to purchase used buses for resale at a time when sales are virtually non-existent, private equity firms often buy distressed companies and equipment at reduced prices with an eye toward returning them to profitability or reselling them at higher prices when the market recovers.
“When you buy coaches at a discount and sell them later at retail value, you can make money,” Lichter said. Global declined to disclose how much of a discount the company received on the MCI coaches.
“But it isn’t only about making money,” Lichter said. “Our goal also is to help the motorcoach industry survive the pandemic.”
He said Global has no plans to dump the coaches on the market for a fraction of their value, something he said a few companies have been doing.
“We don’t want to hurt the value of used motorcoaches,” Lichter said. “We are looking to keep values up on pre-owned coaches.”
Acquiring inventory
He said that while the company has pre-owned coaches available for purchase now, there isn’t much demand for them. The plan is to hold them until the coronavirus vaccines are widely available and the pandemic is curtailed, which, he said, could take several months.
Meanwhile, Global is talking to motorcoach manufacturers, banks and operators about acquiring their used bus inventory, Lichter said.
“We’re also getting calls daily from people wanting to downsize their fleets and to discuss the future when they will be ready to build their fleets back up,” he said. It appears likely that when the virus subsides and bus travel resumes to near pre-pandemic levels, most operators will choose to purchase used coaches because they will be reluctant to commit to large loans to buy new buses until the industry fully recovers.
Expected demand
“Yes, pre-owned coaches will be more in demand than new ones, at least for a while,” Lichter said. “All manufacturers have slowed production, and it is going to take them awhile to pick up production. Some manufacturers might not come back, at least in the U.S. market. But that’s just a theory.”
Global currently has its entire business, including bus storage facilities, in Nashville but plans on expanding around the country and hiring more salespeople, he said. “We’re going to have a whole team. We plan on bringing in people we have worked with in the past. We will have coverage around the nation.
“We’re here to help the industry,” Lichter said, “to keep it strong and to retain strong pre-owned coach values.”
