Coach conversions and the conversion industry in general have been a topic of telephone calls as well as e-mails and the subject of several questions in recent months. Inquiries have ranged from conversion shells to conversion companies and the value of used converted coaches. Where do things stand today and where are conversions going in the future?
Since the July issue of National Bus Trader is traditionally dedicated to conversions, we decided to cover some of these topics in an article. Our old friend Mike Middaugh, who once was on the staff of Custom Coach and now runs executive coaches commercially, volunteered to provide additional thoughts based on his half-century of experience in the industry. We certainly would welcome additional thoughts and comments for the future.
By The Numbers
Converted coaches have been an important and integral part of the coach industry for decades. Our records show that as coaches become older, they are more likely to end up in private hands for private transportation. At one time there was a brisk business in selling used coaches to individuals who set about doing what many people call “back yard conversions.” This particular end of the market has declined in recent years for reasons we will get into later.
Conversion shells have also been an integral part of the new coach market for decades. According to our records, for a least a decade from the late 1990s through 2007, conversion shells represented at least 10 percent of the new coach market. What appears to be the high point was 2004 when 20.4 percent of new coaches were conversion shells. But 2003 came in at 17.3 percent and both 2000 and 2005 exceeded 15 percent. This percentage dropped to 14.2 percent in 2007 and continued dropping after that.
Why has the number of new conversion shells built dropped in the past decade? A number of different reasons have been put forward. Each of them has some merit, and combined together their impact is substantial.
I personally point to a decline in the economy. Our bus industry peaked in 1998 and then declined in following years. Conversion shell sales declined slower than seated coach sales, at least partially because plans were made further in advance. Middaugh suggests: “The high point of motor home conversions was due mainly to the individual wealth of people who had sold businesses, sold homes or sold real estate or a combination. Their money was there to spend.”
Another factor was the price of diesel fuel. While the price of diesel fuel has come down lately, we went through several years where high diesel fuel prices substantially increased the cost of operating a coach. This was more obvious with a private coach. Those people with backyard conversions paying for their own fuel often let their coaches sit because they could not afford the fuel costs. With new conversions, those that could write off the operating costs (entertainer and executive coaches) were more likely to continue than the private motor home conversions.
What is probably a bigger factor than anticipated is lifestyle changes. People today have smaller families. Jet travel is proportionately cheaper and horizons have expanded beyond domestic campgrounds.
Middaugh points out: “The conversion vehicles of the ’60s and ’70s were not just coaches but rather all kinds of things – bread trucks, transit buses, school buses and other vehicles. Most folks were traveling with large families. Perhaps it was more a spirit of adventure (which was no doubt relevant when one attempted to run a transit bus across the country).” He continues, “There were less distractions back then and air travel was a luxury for only a few folks.”
Expectedly, all of these changes have impacted conversion shells to a large extent. Entertainer coaches have appeared to weather the changes well. It helps that their initial and operating costs can be covered by the entertainment income. Likewise, executive coaches are still active with many companies. In fact, in recent months we have seen some expansion of executive coach scheduled service in a couple of markets. It is the private coaches with motor home interiors that have declined the most.
As far as new coach shells are concerned, Prevost has dominated the market. Any coach shells from other sources are in small numbers. Prevost currently offers three different shell models. The 45-foot H3-45 VIP is easily the queen of the conversion shell industry and offers the most space to work with. The X3-45 Entertainer shell is the modernized version of the traditional LeMirage series that has proven itself in commercial service and has been the most popular conversion shell for decades. It currently is used for many entertainer interiors. Based on Prevost’s popular commercial coach, the X3-45 VIP shell has been regularly used with motor home interiors.
Due at least in part to the economy and higher fuel prices, there has also been a trend to smaller vehicles. One of the most popular is the Mercedes-Benz Sprinter. Custom Mobile Interiors (CMI) in Grove City, Ohio, pioneered Sprinter conversions and continues to be active in that area. While the Sprinter is far too small to offer the same amenities as a full-size coach, it does provide luxury personal travel at a more affordable price with lower operating cost. I expect that the new Ford Transit will also become popular in this area.
Factory motor homes may not have the durability or strength of converted coaches, but they do have more amenities and styling these days. Among other things, it is easier to find slide-outs in a new factory motor home than in an old coach conversion.
Many of these same trends have also impacted the RV industry. Several people have talked about the closure of some RV dealers and one friend from Ohio reported difficulty in finding an RV he could rent. It is now increasingly difficult to find a converted coach on display at the Family Motor Coach Association (FMCA) conventions. Prevost no longer sponsors a row of coaches and Custom Coach has not displayed in many years. The events of the late 1990s with 7,000+ FMCA attendees is now a memory although the shows continue with fewer exhibitors and attendees.
Professional and Home Conversions
While most of the conversion companies specializing in entertainer coaches are still active, many of the companies that specialized in motor home conversions are gone. Fallen flags that I can think of offhand include Ramblin’ Fever, American, Executive Coach, Angola and Royal. What remains of Custom Coach is now part of Farber although they still do a limited number of coach conversions. Liberty and Marathon are still active in quality motor home conversions. Both Creative Mobile Interiors (CMI) in Grove City, Ohio and Vulcan Coach in Birmingham, Alabama have become diversified in their conversion work.
The home or backyard conversion part of the industry has declined in recent years. I am sure that the economy, smaller families and fuel prices are part of this. However, as I predicted years ago, many of these people have realized the availability of low mileage, used conversions on the market for attractive prices. Middaugh suggests: “People have realized that they can purchase a petty nice used, professionally-converted coach for less than even the materials they would invest in a do-it-yourself project.”
What this means is that used conversions are very much a buyer’s market right now. If you ever wanted to own a low-mileage, high-quality conversion, now is the time to get into the market and look around.
Unfortunately, we regularly get phone calls from individuals who have a nice old converted coach for sale. Some of the better ones were converted new by a reliable company, have low mileage, have been garage kept and have several features. In almost every situation the owners have an unrealistic idea of what the coach is worth. The two things they fail to take into consideration are financing and other coaches on the market.
People who have a checkbook with six figures are normally not interested in an older conversion. They want something newer and are willing to pay more for it. On the other hand, most people interested in an older conversion do not have cash available and are seeking financing. How much is your old converted coach worth? Go ask the local bank how much of a loan they would give on it. For homemade and backyard conversions, that number is probably nothing. Even with older, low-mileage professional conversions, the money they are willing to loan is very low. Unless you can find an unusual buyer with cash, this is what your coach is worth.
The other major problem is the number of other converted coaches on the used market. I only spent a few minutes on the Internet and came across several bargains including a low mileage 1995 Marathon Prevost for less than $90,000. Using that as a comparison, it soon becomes obvious that the older coaches retain very little value. In fact, I have seen older coaches still with seated interiors that find buyers among historians and bus collectors while the older coaches with converted interiors may be difficult to sell.
In our case here, we were looking at the possibility of replacing our 1990 Custom Coach 102C3 with a newer coach with a side aisle and a Series 60 engine. We never found a suitable coach so we elected to put a new engine in the MCI.
Moving into the Future
Moving into the future, there are several positive things we can point to. One is that the new coaches have several modern features including enhanced safety systems. The new clean diesel engines make current coaches tremendously cleaner than 20 years ago. I also note that recent reduced fuel costs may prompt an increase in coach conversion owners in the future. Of course, the number of low mileage professional used conversions on the market has opened the door for more families to enjoy the converted coach lifestyle.