European bus manufacturers' margins average 2.5%; cost cuts of 20-25% possible with production and design efficiencies, McKinsey says - Sustainable Bus

European bus manufacturers' margins average 2.5%; cost cuts of 20-25% possible with production and design efficiencies, McKinsey says - Sustainable Bus

Briefly

"While some manufacturers reached peaks of 8-10% in favorable years, increased competition and the transition to zero-emission and autonomous technologies are expected to put further pressure on profitability. The study notes that European OEMs could " potentially reduce total costs by up to 50 percent in multiple areas for battery-electric city buses" if they adopt the production efficiencies seen among Chinese competitors. In manufacturing alone, cost reductions of 20-25% could be achieved through " footprint optimization, smart-factory approaches, and AI- and robotic-powered automation.""

"Beyond cost control, McKinsey identifies three key areas where OEMs can improve performance: strengthening their unique selling propositions (USPs), optimizing cost structures, and expanding through strategic partnerships. On the commercial side, total cost of ownership remains a decisive factor for 18-20% of operators, while 20-25% of fleet buyers require flexible financing solutions to enable vehicle procurement. According to the report, " bus purchasers' priorities and concerns are increasingly diverse, shaped by vehicle type, fleet size, and use case," making differentiation through customer-focused offerings essential."