Van Hool: wrong horse or simply Murphy’s Law?

Belgian bus manufacturer Van Hool decided to cut almost half of its jobs at its headquarters in Koningshooikt after a series of cascading troubles eviscerated its competitiveness. Some point to Van Hool’s hydrogen strategy, others to the lack of support from public transport company De Lijn, but neither explanation offers a complete picture.

It has been clear for years that Van Hool has been struggling, especially since the Covid-19 period, when it was forced to use its financial reserves to fill the hole that the European travel ban left. This meant no new orders for long-distance coaches. And guess where the company had shifted its focus after realizing that the market for city buses had become too harsh?

No public transport buses

Belgian politicians like Jos D’Haese (PVDA) and Lydia Peeters (Open Vld), Flemish minister for Mobility, like to point out De Lijn’s decision to go with BYD for a large part of its tender for e-buses.

They say De Lijn should reverse this and go with Van Hool instead, but Van Hool doesn’t want to build public transport city buses anymore, even after presenting a new line of e-buses in 2022. The margins are too small, so they might lose money building them, while Chinese competitors can go much lower in price.

Canary in the coal mine?

If this rings a bell, it is not too dissimilar to what European car manufacturers fear with the Chinese invasion from brands like BYD. They control battery production and are believed to get direct support from the Chinese government, allowing them to undercut European manufacturers while producing much more quickly.

However, whereas car manufacturers have volume and profit margins on their side, Van Hool’s scale is much smaller. A few hundred buses less can make the difference between sinking or swimming. You could see it as a canary in the coal mine: the sign of things to come on a European scale if measures are not taken to protect local players.

Betting on hydrogen: right or wrong?

Another criticism of Van Hool’s strategy is the company’s focus on hydrogen rather than battery-electric drivetrains. Hydrogen buses are more expensive to produce and require infrastructure changes to make them viable for passenger transport companies. In terms of energy efficiency and climate impact, they fall far behind batteries.

However, hydrogen perfectly fits Van Hool’s wish to focus on long-distance coaches. These require lower volume and offer a higher profit margin, making them less vulnerable to the competition mentioned above. Even city bus operators are choosing hydrogen all around Europe.

Hydrogen coaches (or high-floor buses) seem to be the way forward. This was also apparent at Busworld in Brussels last October, where several of these models were shown with ranges of up to 1,000 km and refueling times of less than 20 minutes.

That is much more range and requires less recharging than a battery-powered coach, making them much more usable for long-distance driving. Van Hool also presented a battery-electric coach powered by Proterra in the US, the supplier that caused Volta Trucks to go under last year—another pothole in the road.

Waiting for the infrastructure

Van Hpioneeredr in the hydrogen segment, with multiple products ready in several segments. Toyota and Hyundai also present themselves as experts in these drivetrains but don’t build the buses themselves.

However, the hydrogen coach market is also not yet ready at a large scale. It needs the refueling infrastructure, which is still not up to scratch. The market will likely rely on the hydrogen truck market to become dense enough for companies to consider buying these types of buses.

It is now clear that Van Hool did not have the time to wait for the hydrogen coach market to develop to cash in on its expertise in the matter. After this reorganization, it will try to convince investors it is worth the wait. Otherwise, it is not unlikely that we will see the family company collapse.