SAN ANTONIO – Expo 2018 attendees could be excused for being a little confused when they encountered a Setra luxury motorcoach parked in the REV Group’s exhibition area.
After all, Motor Coach Industries has been the exclusive North American distributor of the Daimler-owned Setra coaches since 2012.
But that all changed at the end of 2017, when Daimler announced that REV Group subsidiary REV Coach had taken over Setra sales in the United States and Canada as of January 1, saying MCI’s focus on selling its own motorocach models was affecting sales of Setras.
Germany-based Daimler “decided to terminate the distribution rights agreement (with MCI) as the product ranges of both companies do not fit perfectly well with each other,” Ulrich Bastert, head of marketing, sales and customer services at Daimler Buses, said in a news release announcing the change.
“Together with the REV Group, we will strive to further expand Setra’s market coverage, strengthen our performance, and further improve support to better serve our coach customers in the United States and Canada,” Bastert said.
In its own release acknowledging the distribution change, MCI said Daimler advised the company its decision “was based on its belief that MCI’s own competing motorcoach models did not allow for sufficient attention to the Setra brand in Canada and the U.S.
“The decision comes as MCI is expanding its own motorcoach lineup and service network,” MCI said.
MCI said it has sold only 282 new Setra motorcoaches since taking over distribution rights in 2012. Last year, the company sold only 21 Setras, said Paul Soubry, president and CEO of New Flyer Industries, MCI’s parent company.
“We’re maybe a little disappointed,” Soubry said during UMA Motorocach Expo 2018 in San Antonio.
But he said the change would be good for MCI because it would allow the company to focus on its own products, including the redesigned J4500 model, a new 35-foot coach, the D45 CRT LE commuter coach and a battery-electric motorcoach planned for 2020.
“We tried to make it work,” added Brent Maitland, MCI vice president of marketing and product planning.
Setra S 407 and S 417 motorcoaches were introduced to the North American market in 2003, and MCI started selling them in 2012 as part of an agreement that included Daimler purchasing a 10-percent equity interest in MCI.
The distribution agreement remained in place after New Flyer acquired 100 percent of the equity of MCI – including Daimler’s 10 percent — in December 2015.
Under the new distribution agreement with REV Group, parts sales, service and warranty support for Setra coaches in service will remain with MCI through June 29 and then transfer to REV on July 1.
REV Group is a manufacturer and distributor of a wide variety of specialty vehicles, including ambulances, fire trucks, school buses, mobility vans, municipal transit buses, terminal trucks, cut-away buses, street sweepers and recreational vehicles.
Tim Sullivan, president and CEO of REV Group, said adding Setra motorcoaches “will provide yet another first-class entrée to our portfolio of transportation vehicles. This collaborative agreement provides for limitless transportation opportunities to explore in North America that we jointly believe will significantly enhance our overall market presence.”
Daimler said it will repurchase all new Setra coaches and service parts inventory on hand at MCI as part of the agreement.
However, MCI still has about 80 used Setras in its inventory that have been traded in on new coaches over the years. Industry observers say that if MCI has to keep those coaches, there is a chance it could decide to sell them at a discount, which would negatively affect the resale value of Setras.
A similar situation arose a couple years ago when ABC Companies was stuck with a bunch of Temsa coaches in its inventory and sold them at low prices, wrecking the resale value of Temsas.
MCI reportedly has warned REV Group and Daimler that they would be better off if they purchased the used Setras instead of MCI trying to unload them.
All MCI would say on the record is that it would be interested in selling them.
“If they wanted to buy them, we’d be happy to sell them to them,” Soubry said.
Meanwhile, MCI said it would continue to honor its agreement to provide parts sales, service and warranty support for Setra coaches through June.
“We will support them to the best of our ability,” Maitland said.