What is this supposed to mean?
Good question. Not a straightforward sentence. Perhaps they park the bus in the back of the garden every evening. :D
Is "In the evening the bus is in the back" also correct?
Yes, that's also correct.
Based on the English sentence, I interpreted this to mean that the bus is consistently running late in the evenings. Could "hátul" be used in this sense in Hungarian as well, or can it only indicate physical location?
What an awkward (but grammatically correct) sentence!