Despite lower input costs, robust demand for chartered bus services will place upward pressure on prices over the three years to 2017.
Los Angeles, CA (PRWEB) February 19, 2015
Chartered bus services have a buyer power score of 3.2 out of 5, indicating that buyers have moderate negotiating power in the market. Rising demand and input costs have transferred pricing power into the hands of suppliers, resulting in steadily increasing prices across the country. “The prevalence of small regional suppliers does not allow buyers to compare prices nationwide, limiting competition and further hindering buyer power,” says IBISWorld procurement analyst Anna Son. “Although buyers can rely on the high availability of substitutes and the lack of switching costs to gain some leverage, dominant pricing trends largely negate these strategies.”
Rising disposable income, corporate profit and tourist activity is rapidly pushing up demand for chartered bus services. “As the economy improves, demand for luxury goods will mount, resulting in high sales for suppliers,” adds Son. “Furthermore, higher spending on new cars will lead to more traffic congestion, pushing buyers toward other forms of transportation.” This trend gives suppliers ample leverage to raise prices. Moreover, input costs for bus operators are on the rise, because the cost of bus repairs and fuel are increasing in the coming years. However, wages have been declining in the past three years. This trend indicates that operating costs are not increasing as quickly as demand, allowing profit margins for suppliers to rise.
Rising profit margins offer a crucial window of opportunity for buyers to negotiate with suppliers. With increased operational efficiency and the falling prices of some inputs, suppliers are more willing to negotiate on price. Buyers can also use the abundance of substitutes and lack of switching costs to put pressure on suppliers and gain additional discounts. Because operating costs are anticipated to remain mostly stable, with the exception of fuel costs, the relative stability in input costs helps sustain buyer power. As such, buyers can make more informed purchasing decisions without having to worry about major price swings. For more information, visit IBISWorld’s Chartered Bus Services procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of chartered bus services. Chartered buses provide road transportation for groups, and generally do not operate over fixed routes or on regular schedules. Suppliers are primarily local operators, with some national suppliers offering these services as well. Buyers can choose from a variety of bus types, including executive coaches, minibuses, school buses and party buses. Suppliers charge hourly and daily rates. This report excludes scenic or sightseeing buses. This report also excludes purchasing buses or bus repair services.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Buying Lead Time
Key RFP Elements
Buyer Power Factors
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