GILLESPIE, Ill.—A one-day, online auction of 108 motorcoaches from Cavallo Bus Lines was a rare singular release of a “Huge, Late Model Motor Coach Fleet,” its sale brochure proclaimed. Industry executives said they are uncertain about the effects of the sale on the new and used motorcoach markets but agreed that it bears watching.
On the other hand, recent sales may offer great deals for churches and other tertiary coach users.
“This is an unfortunate event from an industry perspective and for the staff at Cavallo as well,” said Patrick Scully, executive vice president of sales and marketing at Motor Coach Industries (MCI) in Des Plaines, Ill. “It is not something we like to see but it is not unprecedented. There have been events like this seen sporadically over the past 10 or 15 years when companies have gone out of business or downsized.”
In the past, large numbers of motorcoaches have been dispersed through controlled sales. “In the case we see here, it may be a little bit more distressed given that there is a creditor and an auction house involved. That we haven’t seen before,” he said. “Will it impact the pre-owned market and the new market? It may, but we think it will be a fourth-quarter phenomenon and we will get through it before we are into 2019.”
Cavallo Bus Lines closed its doors on Aug. 12 and furloughed 220 employees at its main shop in Gillespie, Ill., and satellite facilities in Indianapolis, Ind., and Springfield, Mo. Employees reportedly were told that “the company has been put into assignment with a bankruptcy firm.”
The Cavallo family, which operated the company for 74 years, sold it in 2016 to Bennett Capital Partners of Alexandria, Va. The day after the carrier closed, a television reporter found doors locked at the Gillespie headquarters, where a sign advertised the building for sale.
The Oct. 23 auction of Cavallo assets was announced by Maynard’s Industries of Detroit, an industrial asset liquidation company. The sale brochure listed 108 “immaculately maintained” motorcoaches as well as shop equipment and “valuable intellectual property” that included the company name, logo and customer lists.
The fleet included two Temsa coaches and four from Prevost. The remainder was MCI motorcoaches, nearly all J4500 models. There were 22 MCIs that were five years old or newer and another 22 that were 10 years old or less.
Pre-owned coach sales in the U.S. totaled 1,050 last year, according to the American Bus Association Foundation. There were 1,968 new motorcoaches sold in the private sector.
The Cavallo sale could lower used motorcoach values in general and replace sales of a few new coaches by leading some buyers to purchase the nearly new, pre-owned vehicles instead.
A senior officer at a motorcoach financing agency said the Cavallo sale is not insignificant. He asked not to be named because residual values are a sensitive subject for his clients. “I would assume it is going to have an effect. These kinds of things do happen from time to time, but this sale is a bit larger than we have seen in recent years.”
Many of Cavallo’s coaches should have high values, he said. “You don’t typically see a lot of late-model coaches available. There shouldn’t be a reason to blow these out.”
If the auction proceeds rationally, he said, “there doesn’t need to be a huge concern about this. The market tends to do a reasonable job of digesting these.”
Scully agreed that the market effects of the Cavallo sale would depend upon the auction’s conduct. “It is a question of whether they will sell them all. There may be insufficient bids. We hope it is not a fire sale — there is a lot of value there, especially in the recent model-year units.”
Values of pre-owned motorcoaches have been stable for several years, he said. “We hope values aren’t overly depressed from our perspective but quite frankly, much more for the operators. The value of many businesses depends on their [motorcoach] residual values.”
The Cavallo sale included 58 motorcoaches that were more than 10 years old — 16 of those were 1998-2000 models.
MCI had scheduled a “Super Sale” of about two dozen used Setra coaches, mostly around a decade old, on Oct. 24-25. The coaches ranged from 2005 through 2014 models with prices listed at $30,000 to $119,500.
“This is a sale we typically have about once a year,” Scully said. “It is a regular thinning of our inventory, particularly older units and Setra units.”
MCI distributed the German Setra motorcoaches from 2012 through last June 29.
Bus & Motorcoach News reported in March that the “value of older coaches has been diminished by government regulations that have driven smaller carriers out of business and posted entry barriers to start-up operators.”
Who is interested in buying extremely old motorcoaches? “You got me,” the finance officer said. “I hear churches are interested in them. I don’t know if any of them are sold out of the country.”
