How inflation is impacting the motorcoach industry 

Inflation is on the rise. According to a new Department of Labor report, the consumer price index rose 7% in December compared to a year ago, the highest it’s been since June 1982. The CPI is considered a sound index by which to measure inflation.

So how has inflation impacted the motorcoach and bus industry, which has yet to rebound to pre-pandemic revenue levels?

United Motorcoach Association President and CEO Scott Michael gave an overview of how inflation is impacting the industry, using data from the U.S. Bureau of Labor Statistics. He shared five graphics that give a snapshot of costs for vehicles, parts, fuel, insurance and labor.

Cost of Motorcoaches

In 2021, overall motorcoach prices climbed only 1.8% between December 2020 and December 2021. One possible reason prices have held could be a glut in the market for used vehicles. In the first quarter of 2021, motorcoach sales dropped 52% from a year earlier, according to the Motorcoach Builders Survey.

parts graphic

While overall the costs of motorcoaches stayed pretty steady, the prices of parts have jumped dramatically in the past year. Tires are up 9%, and motors and engines increased more than 7%. The factor impacting prices is the shortage of materials tied to labor shortages, production shutdowns and transportation delays. 

Diesel costs

Diesel fuel has climbed nearly 55%. During the first half of 2021, gasoline and diesel prices increased $1 a gallon, driven by social and political dynamics. That included supply disruptions caused by natural disasters or geopolitical events, such as the cyberattack that temporarily shut down the Colonial Pipeline.

Pay scale

Wages – one of the big expenses for businesses – are also on the rise. According to a Conference Board report, U.S. businesses are expected to bump up pay an average of 3.9% in 2022. 

But labor costs have been going up for a while. Referring to U.S. Department of Labor statistics, Scott noted that the industry’s labor pool dropped dramatically in the early states of the pandemic. On average, wages climbed more than 8% to nearly $18 an hour by May 2020.

“We don’t know how things have shaken out in the last year and a half since this report was pulled together, but certainly, the immediate impact of the pandemic indicates that the workforce contracted 25% across the board and in the driver range by 26.7% and with some occupations even higher,” Michael explained. 

In the broader ground passenger transportation industry, which includes limo operators, school buses and scheduled service, the workforce shrank by 20%. He noted that the closure of businesses during the pandemic is one reason for the drop in the industry’s workforce.

insurance chart

But there is a silver lining. Insurance costs are holding steady.

“Insurance costs have not increased nearly as much as most of these other categories. And in fact, workers’ comp is down,” said Michael. “We saw a pretty nice drop in the workers’ comp category. Your umbrella policy has also been pretty flat this year.”

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