More than a bus: financing the next generation of public transport

The global bus market is expected to grow by around 4 per cent annually through 2030, driven by urbanisation, congestion and the push for more sustainable transport. Volvo divides its business into two main segments: city buses, accounting for around 30 per cent of sales, and coaches for long-distance and tourism, representing roughly 70 per cent.

“We work to offer a complete package, with financing, service and support as integral parts,” says Anna Westerberg, President of Volvo Buses. “Many customers focus on uptime – they want their buses to be in use as much as possible, rather than sitting idle because of a lack of service.”

That proposition is particularly relevant in emerging markets, where large public transport investments can be difficult to finance and reliable long-term support can be as important as the initial purchase price.

“Developing countries are often markets where we can make a real difference. When we enter a market, we’re in it for the long run, with a strong brand presence. Financing is connected to our way of doing sustainable business and our long-term commitment to building trust.”

Export finance as a competitive advantage

Financing is increasingly important across both of Volvo's businesses. Public-sector procurements may involve syndicated bank financing, while coach operators can rely on local bank funding. In both cases, EKN guarantees can help banks provide financing on terms that make major purchases possible.

When government ministries are buyers, EKN guarantees may cover 100 per cent of the risk and allow financing over longer durations. Westerberg says, “The support we get from EKN is very valuable to our business, particularly in markets in Latin America and Africa. They reduce the risk to the parties involved and help us boost our competitiveness.”

For Volvo, this is becoming an increasingly important factor in winning business.

“The new development finance instrument from EKN is an important tool when entering growth markets. It can boost our competitiveness against competitors from countries that offer lower-cost solutions, particularly in public bidding rounds where the lowest price matters most but the value of long-term commitment is not always considered.”

The Swedish proposition is built around that longer-term relationship. Volvo establishes local workshops, develops skills and works with local suppliers to ensure customers receive support long after delivery.

“We invest in building skills and resources locally. Our competitiveness as a Swedish company rests on this approach – being a reliable long-term partner matters more than ever in turbulent times.”

Electric buses – but not one solution for every market

Sustainability is another area where Volvo's ability to offer different technologies can be an advantage.

The shift to electric is particularly pronounced in city transport, where shorter routes, predictable operating patterns and access to the power grid make electrification well suited. Volvo introduced its first electric bus in 2017 and today around 10 per cent of its total bus sales are electric; the company expects electric vehicles to account for 80 per cent of city-bus production by 2030.

“We were pioneers,” Westerberg says. “The city applications are well suited to electric buses, with predictable routes and ability to plan charging. Improved air quality and reduced noise levels also matter more in cities.”

But electrification is not equally practical everywhere.

“Developing markets sometimes lack the power infrastructure required for electric buses, which is where Volvo’s range of efficient diesel engines matters. Sustainability means different things in different markets and in different segments. You shouldn’t overlook the important step that the latest generation of fuel-efficient diesel buses can play in a long-term transition to greener transport.”

The strategy is therefore to match the technology to the market rather than prescribe a single route to lower emissions.

BRT: Swedish technology meets urbanisation

The growth of cities is creating particularly strong opportunities for Bus Rapid Transit, or BRT – systems that combine much of the capacity and speed of metro transport with the flexibility and lower cost of buses.

Latin America has been at the forefront of BRT adoption. Volvo has supplied high-capacity articulated and bi-articulated buses to BRT systems across the region, with individual transactions single-handedly exceeding 1,000 buses. Strong support from EKN and arranging banks helped make these deals possible, including local-currency financing in several cases.

We invest in building skills and resources locally. Our competitiveness as a Swedish company rests on this approach – being a reliable long-term partner matters more than ever in turbulent times.

Anna Westerberg, President of Volvo Buses

In Angola, Volvo supplied 153 accessibility-adapted buses to Luanda in 2020. The deal for Angola's Ministry of Transport included financing as well as service and aftermarket support through Volvo Buses' local partner, Nors Trucks and Buses Angola.

For city authorities, such systems are about more than replacing ageing fleets. Efficient public transport can reduce congestion, improve access to employment and make cities more attractive places to live and work.

“Many city bus procurements involve political considerations,” Westerberg says. “Political decision-makers are keen to show that they help citizens deal with the high travel costs associated with relying on privately operated minibuses, which can often be expensive and unsafe.”

The coach business operates differently. Demand is being supported by growth in tourism and long-haul. Operators typically make smaller but more frequent purchases, providing Volvo with a more stable source of profitability alongside the larger, more binary city-bus tenders.

For Volvo, the two businesses therefore complement each other: city-bus projects can generate major individual export opportunities, while coaches provide a broader and more recurring customer base.

A Swedish ecosystem behind the export offer

Volvo's international competitiveness ultimately rests on more than the vehicle itself.

“Sweden’s strong position goes way back. We drive innovation, quality and safety. In Sweden, there is a strong ecosystem based on cooperation between academia, the public sector and the business community.”

Westerberg also emphasises the importance of working with the wider Swedish export ecosystem, including Business Sweden, embassies, SEK and EKN.

For major public procurements, the broader proposition offered by Team Sweden can unlock doors to a range of decision makers across society. Financing can help bridge the gap between a technically strong Swedish solution and a lower-cost competitor, while local presence and long-term support demonstrate the value behind the price tag.

“Competing with vendors focused on slashing prices requires us to come up with complete solutions. ” That may ultimately be the lesson from Volvo Buses' international expansion. In a market where customers are under pressure to transport more people, more sustainably and at lower cost, the winning export proposition extends well beyond the vehicle.

Financing, local expertise, service, uptime and a commitment to the customer over decades can be just as important as the technology itself. For Swedish exporters competing in growth markets, export finance can therefore become a decisive part of the competitive equation.