Signs Point in the Right Direction

December 29, 2025

School Buses — Stock photo of school buses.

The health of the school bus industry was strong and stable in 2025. I predict more of the same in 2026. There is renewed EPA funding optimism, as more funds are set to be dispersed, yet the exact dollar figure remains unknown.The remaining $2 billion in the Clean School Bus program could soon be released to support propane and electric school bus acquisition.

States like New York and California continue to push for more stringent regulations while other states follow the federal mandate of more relaxed emission standards. Keep in mind, a proposed rule to amend the 2027 Greenhouse Gas Emissions (GHG) Phase 3 regulations for heavy-duty vehicles looms.

Regardless of government regulations, engine OEMs have already done the work to get heavy-duty low NOx and CO2 emissions baked into future powertrain solutions. This will likely drive engine prices higher in 2026 and beyond.

As we ended 2025, inflation appeared to have leveled off but still remained too high as are interest rates, despite the Fed’s latest cut. There are hopes of more rate cuts in the future. I see the increased costs being reflected on labor, manufacturing and raw materials
from industry suppliers. Tariff discussions will continue to take center stage as costs on components and goods can change quickly. Those sudden increases are already being passed on to the end user.

School busing should be deemed an essential service, like during COVID, and receive a tariff waiver. It will take a lot of loud and convincing voices to influence policy makers in Washington, D.C. No easy task but worth it.

A benchmark for industry health is new OEM school bus manufacturing data. As reported starting on page 13, the numbers reported are up about 7 percent to 40,345 school buses produced. Clean diesel school bus volumes spiked as the top buying choice for fleets with an overall increase of 3,699 units to 26,677 units. Alternative fuel school bus purchasing was modest relative to the previous year. The green bus market share leader remained electric school buses with 2,906 units manufactured, which was slightly down from the previous year. School bus OEMs have continued to expand school bus electrification offerings across all model types.

Propane-powered school bus volume was down slightly at 1,617 units, and CNG school buses saw a 91-unit decrease compared to last year with a scant 6 units produced. Gasoline school buses were down 515 units to 10,326 units over the previous year’s data. I see the potential for more gasoline adoption in 2026 as school bus OEMs offer the Cummins B6.7 Octane engine. Type A school bus chassis demand and predictability is good. Chassis allocations for school transportation OEMs have remained steady from GM and Ford in 2025.

According to industry insiders, that trend should remain similar for 2026, but tariffs are causing some hesitation in the marketplace.

I am seeing a significant increase in van conversions and van dealers o”ering multi-passenger vehicle (MPV) options to end users. More companies are exhibiting at STN EXPO and TSD Conference than ever before. I expect that market to continue to expand in 2026. Growing budget pressures seem to have accelerated the adoption of alternative student transportation services. This has given school districts another option on a supplemental basis to support growing demand of servicing students with disabilities, special needs or who are experiencing homelessness.

According to a recent STN readership study, over 667 subscribers identified products that they were interested in purchasing over the coming year. The top 2026 buying trends are new Type C and D school buses, new diesel buses/engines/components, wheels/tires, brakes, lighting and LEDs, and cellular radio communications systems. (See the full list on page 16.)

Be sure to utilize this ultimate resource guide for contacts and data, to discover new products and the companies that sell them. I also invite you to participate in the professional development training and networking opportunities we have to o”er at the STN EXPO and the TSD Conference. Learn more at stnexpo.com.

As I look to 2026 and beyond, I see school transportation being future-ready mobility for every student. The yellow school bus of tomorrow is already on the road. The question is no longer whether the industry will transform, but which school districts, suppliers and communities will lead the way.

Editor’s Note: As reprinted from the School Transportation News Buyer’s Guide.