Why US Transit Agencies Pay 'Inconsistent and Exorbitant Prices' for Buses Compared to Europe, Asia

A new research paper outlines the reasons that U.S. transit agencies tend to pay more for transit buses than those in other countries. David Zipper describes the findings in Bloomberg CityLab, noting that the paper, titled Paying Less for Public Transit Buses, “offers a set of answers for the inconsistent and exorbitant prices that public transportation agencies pay for new equipment.”

The paper finds that while average prices for diesel, hybrid, and electric buses have stayed relatively consistent for many years, the cost of procurement can vary widely across agencies. 

Because U.S. transit agencies are required to adhere to Buy America requirements, U.S. buses are usually more expensive than those built elsewhere. Meanwhile, “A lack of vendor options hampers transit agencies’ ability to negotiate when making a deal.”

According to the authors, U.S. transit agencies call for too much cosmetic customization, which also drives up vehicle costs. “With a median contract size of just five vehicles, bus operators cannot exploit economies of scale to lower production costs.”

The paper suggests that smaller agencies bundle their procurements with others to benefit from economies of scale and propose a federally established list of standard vehicle models that could help bring costs down. “Finally, they recommend that foreign bus manufacturers be allowed to sell up to 100 vehicles of a given model, at which point they would need to establish a US manufacturing facility to expand sales further.”