New-truck sales in South Africa rose in 2014

Jan 30, 2015

New-truck sales in South Africa ticked up 2.04% in 2014, compared with the previous year, to 31 554 units. The local truck market delivered yet another “dynamic performance”, says UD Trucks Southern Africa (UDTSA) MD Rory Schulz.

“The truck market has managed to weather the storms we have seen over the last couple of years.” In terms of the various segments in the South African truck market, sales of medium commercial vehicles (MCVs) declined by 4.86% in 2014 to reach 11 021 units.

Sales of heavy commercial vehicles (HCVs) increased 0.04% to 5 476 units. The extra-heavy commercial vehicle (XHCV) market saw sales jump by 7.68% to 13 804 units. “A recovery in the platinum mining sector and increased activities in heavy construction and long haulage were the main drivers of demand for extra-heavy trucks,” notes Schulz.

The star performer of 2014 was the bus market, jumping 19.79%, compared with 2013, to 1 253 units. “The phasing-in of bus rapid transit systems in metros such as Tshwane and Cape Town contributed significantly to the increase in new bus sales,” says Schulz.

Mercedes-Benz remained the top selling commercial vehicle brand in South Africa, with a 16.35% share of the market (2013:17.21%), followed by Isuzu with 12.84% (2013:13%) and Hino with 12.77% (2013:12.77%). UDTSA, in fourth position, increased its market share from 9.96% in 2013 to 10.66% in 2014.

The local arm of the Japanese truck maker also increased sales by 9.29% to 3 365 units, with the brand again the top performer in the HCV segment. Gazing into the crystal ball, Schulz expects more of the same in 2015, with the domestic new-truck market expected to expand by 2.05% to 32 201 units.

However, this forecast does not include any shock event in its modelling, such as prolonged strikes or energy blackouts, he adds. Several factors will impact on the local truck market, says Schulz.

Economic growth in South Africa is expected to increase slightly, to 2.5%, while some credit rating downgrades remain a concern. The country’s Gross Fixed Capital Formation index is also set to decrease marginally, as investment in construction and nonresidential buildings declines – always a good indicator that there will be demand for construction-related truck applications, notes Schulz.

Inflation is expected to ease owing to lower crude oil prices, while no interest rate hikes are expected until the third quarter of the year. “Exchange rates remain a problem for the industry, with the effects of the rand weakness in 2013 and 2014 to be felt through higher-than-inflation product price increases in 2015 by all truck manufacturers,” says Schulz.

“We are also hoping that labour relations will be better after the prolonged industrial action in various segments throughout 2014,” he adds. Schulz also notes that bulk goods are still transported by road in South Africa, and not by rail, creating demand for new trucks.

Transport operators are also operating younger fleets, with more responsible replacement policies in place, compared with the expensive habit to sweat assets, as seen during the economic downturn in 2009. UDTSA expects the MCV segment to contract by 1% in 2015, with 1% growth in HCV sales, 4% growth in XHCV sales and a 12% expansion in the bus market.

UDTSA will work to “maintain and hold” its position in 2015, with the company expected to lose some market share this year as product gaps in the MCV segment impact on sales. However, new products due for release in 2015 may boost sales, although the positive impact of these new releases will not be immediately felt, probably spilling over into 2016, says Schulz.

UDTSA, part of the Volvo Group South Africa, is set to launch its new Quester XHCV range in March. The Quester range will not replace the company’s current Quon range, but rather enhance UDTSA’s current product offering. “The Quester is expected to be UD’s most cost-efficient truck ever,” says Schulz. “The new range will cut fuel costs and maximise uptime, giving fleet owners quick, dependable payback that will help them succeed in their business.”

 

Source: Engineering News South Africa

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