Leasing over purchasing

[Ginger66]

I had a great think before posting about this topic.

The leasing of buses is a good idea.
(1) if god forbid NXWM went bus, debt recovery would have to happen.  As newer buses are leased this would not be accountable as stock to offset any possible debt.
(2) if leasing company was to go bust there's could be a possibility NX could by the buses that they leased on the cheap.

I think there are other reasons but the top two are key reasons why leasing is good.

[j789]

I had a great think before posting about this topic.

The leasing of buses is a good idea.
(1) if god forbid NXWM went bus, debt recovery would have to happen.  As newer buses are leased this would not be accountable as stock to offset any possible debt.
(2) if leasing company was to go bust there's could be a possibility NX could by the buses that they leased on the cheap.

I think there are other reasons but the top two are key reasons why leasing is good.

This is a bit overly simplistic. Pros of leasing include reduced initial financial outlay for new vehicles and leasing can include vehicle maintenance costs too. Good for some companies particularly those running contract services of a set duration as the bus can just be returned to the leader should the company lose the contract.

Cons though are that over the 20 year expected life of a bus, like the Tridents have done at NXWM, the leasing costs would have been significantly higher leasing for those 20 years instead of purchasing. Yes it is likely that over those 20 years the leased vehicle could have been updated so newer vehicles would be used however the extra costs would still be significant. Good maintenance, like NXWM have, mean that one vehicle can have an extended life.

Another con is the base cost of the bus when factoring in route running costs. This does depend on the profitability of routes, but generally after about 10 years of ownership, the bus will have repaid its cost price so any time after that the bus no longer is actually 'costing' the company anything (accept ongoing maintenance costs). Therefore, the running costs of these buses on routes would be reduced compared to if they had leased the vehicles where the leasing costs would still remain after 10 years. That is why marginal routes often use older vehicles like this to lower costs.

Also, outright purchase does not necessarily mean the company paying £300000 for a bus in one go to own it. Like car finance deals, this can be paid over a number of years rather than in one go so costs can be more manageable that way.

[Tony]

This is a bit overly simplistic. Pros of leasing include reduced initial financial outlay for new vehicles and leasing can include vehicle maintenance costs too. Good for some companies particularly those running contract services of a set duration as the bus can just be returned to the leader should the company lose the contract.

Cons though are that over the 20 year expected life of a bus, like the Tridents have done at NXWM, the leasing costs would have been significantly higher leasing for those 20 years instead of purchasing. Yes it is likely that over those 20 years the leased vehicle could have been updated so newer vehicles would be used however the extra costs would still be significant. Good maintenance, like NXWM have, mean that one vehicle can have an extended life.

Another con is the base cost of the bus when factoring in route running costs. This does depend on the profitability of routes, but generally after about 10 years of ownership, the bus will have repaid its cost price so any time after that the bus no longer is actually 'costing' the company anything (accept ongoing maintenance costs). Therefore, the running costs of these buses on routes would be reduced compared to if they had leased the vehicles where the leasing costs would still remain after 10 years. That is why marginal routes often use older vehicles like this to lower costs.

Also, outright purchase does not necessarily mean the company paying £300000 for a bus in one go to own it. Like car finance deals, this can be paid over a number of years rather than in one go so costs can be more manageable that way.

NX Currently use 3 methods

Some buses are owned

Some buses are leased (Some Scanias and some E400s).

New Electrics are on a service provision agreement similar to how the leasing companies rent trains to TOCs

[Lukeee]

NX Currently use 3 methods

Some buses are owned

Some buses are leased (Some Scanias and some E400s).

New Electrics are on a service provision agreement similar to how the leasing companies rent trains to TOCs

Always thought the E400s were all owned outright, learn something new everyday

[j789]

NX Currently use 3 methods

Some buses are owned

Some buses are leased (Some Scanias and some E400s).

New Electrics are on a service provision agreement similar to how the leasing companies rent trains to TOCs

Have NXWM purchased outright any buses previously leased before?

[Tony]

Have NXWM purchased outright any buses previously leased before?

Yes, sometimes it is cheaper to buy a bus at the end of the lease

[2900]

Yes, sometimes it is cheaper to buy a bus at the end of the lease

i bet scanias or any full size single decker are cheap to buy after the leasing period is over, from what i have seen over the years double deckers find new homes easily compared to singles. in my time the only batch of single deckers to be sold on ere the 56 plate volvo b7rle 

[frostjay974]

Are the E400s, Scania Omnilinks and the EVs the only vehicles that have been leased to NX or are there any others that we don't know of?