Truck sales seen picking up after dire 2016
Fixed investment is expected to grow 2.2%, which will benefit the commercial vehicle market, says Rory Schulz of UD Trucks
The South African commercial vehicle market is expected to grow marginally by an estimated 3% during 2017 to about 28,998 units.
This is according to a market analysis presented by Rory Schulz, MD of UD Trucks Southern Africa.
"When you consider the fixed investment rate is expected to grow by about 2.2% in 2017, it is a good indicator 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," explains Schulz.
Other factors that could have a negative impact on the commercial vehicle industry are ongoing political tension, the persistent risk of credit rating downgrades as well as an expected increase in taxes set to erode real purchasing power.
At the end of 2016 total truck sales were down by 11.4% to 27,010 units compared with 2015’s results, according to the results published by the National Association of Automobile Manufacturers of SA (Naamsa).
"This is the lowest local sales total for commercial vehicles in five years," says 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 about 8,000 units in 1999 when the GDP was last at this low level.
Buses were the only segment that ended 2016 in the green, with a year-on-year growth of 14% to 1,276 units. Schulz says this performance resulted from several large orders received from some of the major bus operators in the industry.
For the truck industry, as well as society as a whole to grow and prosper, a re-ignition of SA’s economy is required.
"While other countries in the region are racing to construct roads, ports, power stations and hospitals, SA 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 is done by South African firms, while 32% of contracts are awarded to Chinese entities. There are clearly more opportunities to seize for SA and to grow our economy," he says.
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, explains Schulz.
Looking at other markets in southern and east Africa, truck sales are still driven by infrastructural developments.
"The Kenyan market, which stands at an estimated 4,002 new units in 2016, is recovering from a decline caused by changes in the import legislation on completely built units," says Schulz. "The Angolan economy remains heavily impacted by low oil prices and only 1,146 new sales were recorded last year. Uganda had a total of 788 truck sales in 2016. Growth is expected in the short to medium term."