Motor Coach Industries Inc. (MCI), the U.S. subsidiary of New Flyer Industries Inc., announced today that EvoBus GmBH (Daimler) has terminated the distribution rights agreement (DRA) for German-built Setra motorcoaches in the U.S. and Canada effective June 29, 2018.
Under previous private equity ownership, MCI entered into the DRA as part of a transaction that resulted in Daimler owning 10% of the equity of MCI in 2012. When New Flyer acquired 100% of the equity of MCI in December 2015, the DRA remained in place. The models covered by the agreement were the Setra S 407 and S 417 motorcoaches, introduced by Daimler in North America in 2003. Since 2012, MCI has sold only 282 new Setra coaches.
Daimler advised MCI their decision was based on its belief that MCI’s own competing motorcoach models did not allow for sufficient attention to the Setra brand in Canada and the U.S. The decision comes as MCI is expanding its own motorcoach lineup and service network. Among recent moves, MCI has redesigned its best-selling J4500 model, has recently introduced a new 35-foot coach, its fully accessible D45 CRT LE commuter coach, and has announced plans to introduce a battery-electric motorcoach by 2020.
Sales of new Setra coaches will transfer to Daimler’s new North American distributor immediately, while parts sales, service and warranty support for Setra coaches in service will remain with MCI and then transfer mid-2018. Under the terms of the DRA and as part of the transition, Daimler will re-purchase all new Setra coaches and service parts inventory on hand at MCI.
“We appreciated our relationship with Daimler, and will fully support the DRA transition for our mutual customers. Most importantly, we will continue to focus on building our industry leading MCI coach brand, along with offering service and parts support for operators throughout North America,” said Patrick Scully, MCI executive VP, sales and marketing.