EDITOR’S NOTE: This article is reprinted with permission from the publisher AutoData. The article includes substantial information from Priscila Von Zuben Spadine, Data and Forecast Manager at Power Systems Research.
By Natasha Werneck
AutoData
High interest rates, weak demand, and the smaller impact of the Caminho da Escola program are dragging down the pace of Brazil’s bus industry
After posting moderate growth in 2025, although below initial expectations, the Brazilian bus market entered 2026 in contraction, recording a pronounced decline in the first quarter compared with the same period last year. Data presented by Anfavea, the association representing chassis manufacturers, show that, despite a punctual rebound in March, the performance of the last three months reinforces a slowdown scenario.
Registrations rebounded and totaled nearly 2,000 units in March, up 50% from February and 9.3% higher than in the same month of 2025. In the quarter to date, however, the result remains negative: 4,400 buses were licensed, representing a 19.6% decline compared with the same period in 2025.
“For the bus market we had projected a 3% decline in 2026 and, through March, the contraction is already above 19%,” says Anfavea president Igor Calvet. According to him, the scenario “is beginning to become concerning,” especially because of the sector’s structural dependence on public programs: “A large part of the market depends on public policy, especially the Caminho da Escola program, which carries a great deal of weight.”
Calvet points out that the situation of the bus market in Brazil exposes an imbalance in this segment: “Public demand is important, but we also need to develop mechanisms to reduce this dependence.”
The weaker performance of the segment is also showing up in foreign trade. Exports fell 53.4% in March year over year and accumulated a 33.5% decline in the quarter. At the same time, production continued on the opposite path: from January to March, 7,600 chassis were manufactured, up 5.9%, highlighting a supply-and-demand mismatch.
A Stabilization Phase
According to PSR, Power Systems Research, the sector is entering 2026 in a stabilization phase after the post-pandemic growth cycle.
“There is a cycle change more than a structural deterioration,” says Priscila Von Zuben Spadine, Data and Forecast Manager. “The level of activity remains high, but there is a loss of momentum, mainly in the domestic market.”
PSR’s projection indicates production close to 27,000 buses and sales around 22,600 units this year, with a moderate contraction: “It is a decline, but still within a high level of activity,” says the consultant, who estimates a 4% to 6% drop in 2026.
In Priscila Spadine’s view, the current movement is still one of adjustment: “This is not about denying the decline, but about putting it into context within a still-elevated level. The bus market is very cyclical and depends on external factors. There is a loss of pace now, but not a structural break.”
At the same time, the consultant draws attention to the mismatch between production and sales: “Production has been increasing, but it is not being sustained by current demand. The reading is one of inventory build-up, which should be absorbed throughout the year.”
High Interest Rates Hold Back Sales
Within the industry, the tone is cautious. For Walter Barbosa, vice president of Mercedes-Benz do Brasil in charge of the Bus Division, the beginning of this year is unlike the historical pattern: “Normally the first quarter is strong for buses, but this year started differently, with a decline of around 20% in registrations.”
He avoids treating March’s performance as a sign of recovery:
“We still cannot say there has been a turnaround. February had few business days and the pace remains uncertain. We need to monitor the next few months.”
According to Barbosa, the macroeconomic environment has been weighing directly on purchasing decisions: “Global economic and political uncertainties are leading customers to adopt a more cautious short-term stance.”
The main obstacle, however, continues to be expensive credit, which discourages investment: “The base rate of 14.75% translates into a final financing cost of 18% to 20% per year. Who can afford that?” he asks. “At this level of interest rates, only those who are forced to renew or who have taken on a new contract make purchases. This postponement behavior is visible. Customers are delaying investments.”
At Marcopolo, the view is that the cycle has been interrupted, but without a drastic rupture, according to Ricardo Portolan, Marketing and Sales Director: “The market had been growing since 2022, semester after semester, and the second half of 2025 was the first in which there was a decline. That interrupts the cycle, but it indicates stabilization more than a sharp drop.”
For the executive, the first quarter confirms this trend: “In addition to stabilization, we had the effect of seasonality. Without the migration of orders from the end of the previous year, the start of 2026 reflected weaker behavior, which is typical for the period.”
Marcopolo is working with the expectation of a 5% to 10% decline in bus sales this year: “To close the year within this range, the market will need to grow over the next quarters, even if the final result remains below 2025.”
Portolan reinforces the impact of expensive credit on business: “There is no cancellation of already closed orders, but there is a postponement in purchase decisions. Customers are delaying larger volumes because of financing costs.”
For PSR, this picture should persist in the short term: “The macroeconomic scenario does not favor a recovery in private demand. High interest rates and uncertainty tend to delay investments,” says Priscila Spadine. She also warns about pressure on operators: “Margins are increasingly tight, which reduces the incentive for fleet renewal.”
Expectation of Slight Improvement
For Roberto Cortes, president of Volkswagen Caminhões e Ônibus, it is still too early to define a trend for the bus market: “We are at the beginning of the year. January and February were weaker, but March returned to a level closer to last year.”
According to him, the sector depends heavily on fleet renewal cycles: “These movements are not linear. Over the course of the year, the market tends to normalize.” Even so, the expectation is conservative: “Today we are working with a stability scenario compared with 2025.”
Cortes also points to credit as the main brake: “With high interest rates, purchases are restricted to those with immediate needs. The math simply does not work.” He also notes that new technologies depend on incentives: “Electric and gas-powered buses need subsidies. Without that, they do not gain scale.”
At Iveco Bus, as indicated by the division’s director for Latin America, Maurício Yamamoto, the scenario is seen as an adjustment after a positive cycle: “The beginning of 2026 reflects postponed purchases, the pace of bidding processes, and the high cost of credit.” Despite this, he sees fundamentals as preserved: “The market remains demanding, with a need for fleet renewal and transportation modernization.”
According to Yamamoto, the expectation is for improvement throughout the year: “As bidding processes and renewals move forward, we may see a gradual recovery.”
Caminho da Escola
In recent years, the performance of the domestic market has been strongly influenced by federal government tenders for school bus purchases: “Caminho da Escola accounts for around 30% of sales and continues to be a relevant support factor,” Yamamoto agrees.
In this sense, the most recent relief came on April 14: after several delays and uncertainties about the continuity of the program that guarantees revenue for manufacturers, the Ministry of Education carried out the tender for 7,470 school buses. In all, thirteen types of vehicles were tendered, with prices ranging from R$459,000 to just over R$1 million per unit, depending on the configuration.
VWCO will supply most of the buses, since it presented the best prices for 6,590 units, or 88.2% of the total tendered volume. Marcopolo/Volare will supply 620 units and Agrale another 260.
Portolan, Marcopolo’s director, reaffirms the importance of Caminho da Escola but without expecting additional momentum: “The program is essential to maintain the market level, not to expand it.”
Holding Pattern
In the foreign market, expectations are also for weakness among chassis and body manufacturers: “After a strong 2025, the trend is for exports to decline, although less intensely. It should not be a growth driver,” evaluates Priscila Spadine of PSR.
Given this set of factors, the consensus is that 2026 will be a transition year: “If we have lower interest rates and maintenance of public programs, the market may sustain itself at a higher level.” Otherwise, the sector should remain in a holding pattern, as Portolan summarizes: “The growth potential exists, but it depends directly on more affordable credit and more favorable financing conditions.” PSR
