Breakdown of Im Bus ist kein Platz frei, deshalb stehe ich.
Questions & Answers about Im Bus ist kein Platz frei, deshalb stehe ich.
Im is the contracted form of in dem.
So Im Bus literally = In dem Bus = in the bus.
Both are grammatically correct. In normal spoken and written German, the contracted form im is much more common and sounds more natural. In dem Bus would only be used if you want to stress dem for contrast, or in very formal language.
The preposition in can take either accusative or dative, depending on whether there is movement into something (accusative) or just location (dative).
- Location (where?): dative
- Im Bus (in the bus – just describing where you are)
- Movement (into where?): accusative
- Ich gehe in den Bus. (I go into the bus)
In this sentence, you are just saying where there is no free seat, not moving anywhere, so Bus is dative: in dem Bus → im Bus.