SHANGHAI, Nov. 29, 2012 /PRNewswire/ -- Rapid urbanization and the consequent rise in the demand for public transit systems could well make China the largest market for transit buses in the world. Being a largely state-driven market, it is expected to benefit the most from the upcoming hybridization and electrification programs. This provides global original equipment manufacturers (OEMs) and suppliers with opportunities to develop strong and sustainable partnerships with Chinese OEMs and suppliers. New analysis from Frost & Sullivan ( http://www.automotive.frost.com), Strategic Analysis of the Chinese Hybrid and Electric Transit Bus Market, finds that the total hybrid and electric transit bus sales in China are expected to reach over 12,000 units by 2018, from 3,374 units in 2011. By 2018, the hybrid and electric powertrain penetration in transit buses is anticipated to be more than 14 percent. The total transit bus sales are likely to exceed 80,000 units by 2018, cementing China's domination of the global transit bus market. This is compelling OEMs to develop innovative products, technologies, and supply chains that can help reduce the high upfront and lifecycle costs of these vehicles. "The market for hybrid and electric transit buses is experiencing considerable momentum due to volatile energy prices, consumers' awareness about fuel efficiency, and recent green incentives by the Chinese government aimed at promoting alternative powertrain technologies," said Frost & Sullivan Industry Analyst Bharani Lakshminarasimhan. "Of all alternative powertrain technologies, hybrid technology places the least pressure on existing infrastructure." However, customers consider hybrid and electric buses prohibitively priced and their unproven reliability and duty cycle limitations discourage large-scale investment. Nascent battery technology and poor charging infrastructure along transit corridors are additional deterrents. The price sensitivity of Chinese customers is accelerating the implementation of strategies aimed at reducing the upfront costs of the base vehicle, hybrid/electric drivetrain, or both. OEMs' desire to differentiate themselves is impelling them to reduce operation costs and improve product quality. Key components such as modules and battery systems could become more expensive in the short term due to OEMs' dependence on foreign suppliers.