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Reignition of Economy Needed to Lift Truck Sales

20 January 2017 | Print

The South African commercial vehicle market is expected to grow marginally by an estimated 3% during 2017 to around 28 998 units.

Rory Schulz, marketing director of UD Trucks Southern Africa The South African commercial vehicle market is expected to grow marginally by an estimated 3% during 2017 to around 28 998 units. This is according to a market analysis presented by Rory Schulz, marketing director of UD Trucks Southern Africa.  “When you consider that the fixed investment rate is expected to grow by around 2.2% in 2017, it is a good indicator that companies will invest in new assets like trucks.  In addition, a slight increase in the GDP is also expected – all which should have a more positive impact on the local truck industry,” explained Schulz. Other factors that could have a negative impact on the commercial vehicle industry are ongoing political tensions, the persistent risk of credit rating downgrades as well as an expected increase in taxes that are set to erode real purchasing power. At the end of 2016 total truck sales were down by 11.4% to 27 010 units compared to 2015’s results, according to the latest results published by the National Association of Automobile Manufacturers of South Africa (Naamsa).

Rory Schulz, marketing director of UD Trucks Southern Africa speaking on trtuck sales in SA 

“This is the lowest local sales total for commercial vehicles in five years,” said Schulz.  “This can mainly be attributed to a slow economy, a lack of business confidence and struggling commodity prices.”
He said that one should take into consideration that the local truck market was around 8 000 units in 1999 when the GDP was last at this low level. Busses were the only segment that ended 2016 in the green, with a year-on-year growth of 14% to 1 276 units.  Schulz said this performance resulted from several large orders received from some of the major bus operators in the industry.

“This is the lowest local sales total for commercial vehicles in five years, this can mainly be attributed to a slow economy, a lack of business confidence and struggling commodity prices.”

Sales in the Medium Commercial Vehicle (MCV) segment were down by 18.9% to 8 432 units, while the Heavy Commercial Vehicle (HCV) segment concluded the year on 5 452 units – a 3.8% decline on 2015’s results.  The Extra Heavy Commercial Vehicle (EHCV) segment declined by 10.8% to 11 850 units in 2016.

Reigniting the Economy

Schulz said that in order for the truck industry, as well as society as a whole to grow and prosper, a reignition of the South African economy is required. “While other countries in the region are racing to construct roads, ports, power stations and hospitals, South Africa is clearly lacking the political and economical drive to fast-track sustainable development.  As a country, we have vast expertise but for instance, only 7% of construction in the region are done by South African companies, while 32% of contracts are awarded to Chinese entities.  There are clearly more opportunities to seize for South Africa and to grow our local economy,” said Schulz.  A consolidated road freight industry is also needed to drive reform and advancement in the sector, as well as in the larger economy.
“Trucks touch every facet of the society and is a key driver of economic development, from construction to long-haul transport of commodities, cold chain logistics and utilities.  Businesses therefore have to be enabled by government to succeed through a balance of regulations and costs of operations,” explained Schulz.

Regional Performance and Outlook

Looking at other markets in southern and eastern Africa, truck sales are still driven by several infrastructural developments.
“The Kenyan market which stands an estimated 4 002 new units in 2016, is recovering from a steep decline caused by changes in the country’s import legislation on Completely Built Units (CBUs),” said Schulz.  “Meanwhile, the Angolan economy remains heavily impacted by record low oil prices and only around 1 146 new sales were recorded last year.  Uganda just go out of an election cycle, with a new truck sales total of 788 units in 2016, growth is expected in the short to medium term.”
UD Trucks Southern Africa is also responsible for 18 markets in Africa, and Kenya has been identified as a priority KD-assembly (Knock-Down units) development within the next year.  Kenya, along with Tanzania and Uganda, have some of the best-performing economies in the world, and the planned facility is aimed at addressing the growing need for trucks as these countries continue to develop and grow. The company’s dealers in these markets are strategically positioned to capture new business and most importantly, to support customers wherever they operate in the region.
“With a well-developed international support structure and strengthening region-wide dealer network, we are able to offer the best customised and relevant support to our local fleet owners,” said Gert Swanepoel, acting vice president of UD Trucks Southern Africa.  “With a versatile product range and more models to be introduced this year, UD customers are able to utilise the right truck for their specific business requirements.”
In 2016, the Volvo Group, of which UD Trucks forms part of, adopted a more customer-centric strategy through a brand-focussed approach.
“The passion and expertise within UD Trucks remains and the local team is ready to take on the challenge and go the extra mile for our customers across southern and eastern Africa through unrelenting support and service excellence,” said Swanepoel.
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