African markets will offer a sales bonanza to South African truck companies once oil and commodities prices recover, Torbjörn Christensson, president of Volvo Group Southern Africa, said on Tuesday.
Volvo was forecasting growth of at least 400% in sales of its new trucks in southern and east Africa over the next five years as mining and other transport-dependent industries replaced ageing vehicles.
From the 200-300 vehicles shipped out annually by Volvo, he aimed to grow the number to 1,500 by the end of 2021.
Christensson said the main beneficiary would be extra-heavy trucks of more than 16 tonnes. Industries in countries hit by low commodities prices had cut costs by running vehicles longer, buying cheap new Chinese vehicles or used ones from established brands.
He said big companies in countries such as Zambia, Angola and Kenya were inquiring about new vehicles, with the emphasis on brands with a reputation for reliability, low running costs and good service. There were also opportunities for used South African trucks with warranties still in place. Typically, these vehicles would be about three years old.
Former British colonies had traditionally received most
of their used vehicles from the UK but trucks built there
had become so technologically advanced, that they were
not always suitable for local conditions, he said.
Christensson said their diesel engines, for example, could not cope with the quality of fuel found in much of Africa.
SA engines, by contrast, were designed for it.
"We are exporting 40%-50% of our used trucks," he said.
Christensson also took an optimistic view of prospects for the SA truck market. Where most analysts have suggested it will remain flat in 2017, he forecast a 5% rise.
He echoed doubts expressed by other local truck companies about the advisability of the government’s desire to extend its Automotive Production and Development Programme (APDP) for cars and light commercial vehicles, to the truck sector.
It might be cost-effective for car plants building 100,000 vehicles annually to source most components locally, but the same did not apply to truck factories producing 2,000 or fewer.
The government has opened talks with the motor industry about a successor to the APDP, which expires at the end of 2020, and hinted that it wants more local content in trucks.
"We will do whatever legislation requires us to do but enforced localisation will hurt prices," he said.
"Customers will pay thousands of rands more for their trucks," he said.