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According to production notes for The Muppets:
"Dr. Teeth and the Electic Mayhem have been touring since 1975, and their school bus imploded somewhere in Montana last year, so they needed a new mode of transport that was consistent with their vibe. The classic VW Microbus, with cosmic paint job and groovy interior, was the logical choice." 
In addition to a road-worthy van, second van was decorated and the undercarriage and floor were moved to allow the puppeteers and crew to work at thhe necessary heights.