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Bus Makers and China's Eco-Transit Plan

Stocks in this article: VOLVY FIATY HYMLF CMI DDAIF

One major name with a resume in China is Volvo (VOLVY). It makes hybrid buses and in 2009 agreed to sell 1,500 vehicles to the city of Shanghai ahead of its World Expo a year later. That deal earned Volvo about $200 million.

A possible rival would be Fiat (FIATY), which makes natural gas-powered buses and has worked with a Chinese partner since 2001 on vehicles for the local market. Its Irisbus Citelis CNG model vehicles are gaining steam in world cities, though company share prices could use a fuel injection after falling to almost zero last year.

Hyundai Motor (HYMLF) of South Korea also rolled out its first hybrid compressed natural gas buses in 2011 with plans to mass produce them from 2012. The maker of hybrids, electric vehicles and fuel-cell electric vehicles designed the "Blue City" model buses with five rather than seven fuel tanks with no loss in the total fuelling capacity, according to the Green Car Congress Web site.

But China, being on push now to promote homegrown businesses, might turn to its own kind for the new bus fleets. A prime candidate would be Beijing-based Beiqi Foton Motor (600166.SS), which already makes natural gas-powered buses for domestic use as well as sale to other parts of Asia.

Foton says its brand value in 2010 was 38.872 billion yuan ($6.25 billion) and that in the same year it sold more than 680,000 units of all types, not a small number. Company share prices reached a historic high in 2010 but later sank and then traded nearly flat through 2012.

The firm operates joint China ventures with Cummins (CMI) and Daimler (DDAIF), although Foton's Web site links neither with the production of green buses.

But if going local, it's hard to beat BYD (1211.HK), at least on paper. The Shenzhen-based automaker says on its Web site that it has developed an all-electric bus that can go for 155 miles in city traffic between charges. It allows fleet booking as well as direct purchases of buses, which have been shipped to Europe already.

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