IC Bus Announces ‘Commodity Surcharge’ on All New School Bus Purchases

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Effective in mid-September, IC Bus customers will pay up to $1,495 more for a new school bus because of increasing commodity prices.

IC Bus made the announcement as the company said in a statement today that market conditions and global demand have raised commodity prices to historical highs, forcing a commodity surcharge on its bus models starting Sept. 15. Other price increases were also expected by other school bus manufacturers, though there was no word at this writing of how much prices would be raised. Traditionally, new purchase costs have risen by about 3 percent a year.

Meanwhile, IC Bus added that market prices had retreated some but remained higher than 2009 and 2010 levels. This combined with global expansion and investor speculation are driving those prices even higher for precious metals and other raw materials necessary for production. The continued increase in the price of precious metals like copper, platinum and steel as well as other raw materials such as rubber.

The company added that it “is diligently working to alleviate the higher commodity prices by absorbing as many costs as possible through manufacturing efficiencies and by challenging operational costs with its supply base.”

“Our efforts to mitigate price increases through manufacturing efficiencies have allowed for us to absorb some of the increases, but we could not absorb them all,” added John McKinney, president of IC Bus. “Global commodity increases are affecting all manufacturing, and unfortunately, they are beyond our control, leaving us no choice but to share those additional costs with the customer.”

For example, steel and its derivatives account for more than 41 percent of the material value of a bus. IC Bus said steel prices have increased between 60 percent and 116 percent since 2009. Platinum, which make up almost 11 percent of a bus’s material value, have gone up 46 percent over that same period. The cost of rubber, accounting for 5 percent of the material value of a bus, has increased by 183 percent since 2009. Meanwhile, the cost of lead is also 64 percent higher than it was two years ago.

“These costs have a significant, direct impact on the raw materials needed to build buses,” McKinney said. “We will continue to closely monitor market conditions and do everything possible to manufacture the best quality buses at the most efficient prices for our customers.”