DAVID FURLONGER: Big wheels keep on turning

Their vehicles keep the wheels of SA trade and commerce rolling — particularly in the absence of a decent railway alternative — but truck companies are content to play a low-profile role in the local motor industry.

Not for them the need to pursue ambitious local content targets, or prepare for the wholesale electrification of their vehicle lineups. Most automotive government policy passes them by.

Of course, they’d love to be in a position to merit a centre-stage role but the SA truck market is simply too small. In 2021, according to the Automotive Business Council (Naamsa), medium and heavy trucks contributed 27,075 to a total domestic market of 464,493 new vehicles.

In August, their share of 47,420 was 2,789 — split between about 15 companies.

One of them is UD Trucks Southern Africa. Last month the company, which changed its name from Nissan Diesel in 2010 and is now a wholly owned subsidiary of Isuzu, sold 255 trucks, making it one of the market leaders. It was also runaway winner of the export stakes, selling 28 vehicles to customers elsewhere in Africa. That was exactly half the truck industry export total of 56.

Like the rest of the sector, the truck market is still recovering from two years of Covid. Some analysts think it could return to 2019 levels this year, but UD sales director Rory Schulz suggests it could take a bit longer. By the end of August, year-on-year sales of medium-sized commercial vehicles (3.5t-8.5t) were down 0.4% on 2021 but heavy commercials (8.5t-16.5t) were up 20.3% and extra-heavies (over 16.5t) up 19.1%.

Much of this is due to pent-up demand, with fleet and business owners finally being able to throw off the constraining shackles of Covid. However, as that demand is satisfied, and galloping inflation and interest rates take their toll, Schulz expects “some flattening and slower growth” in coming months.

As with the car market, demand for used trucks has been buoyant for some time, but stocks of good-quality vehicles are low. This could be a boost for new demand.

No-one can be sure, though. As MD Filip van den Heede points out, components supply constraints continue to hamper companies’ ability to deliver everything customers require.

Semiconductor microchips are a case in point. They may not be used in the same numbers as in some cars, but they are still a vital part of a truck’s makeup. It’s estimated that the global motor industry has had to cut back production by 13-million vehicles since the shortage struck in earnest at the start of last year. Van den Heede confirms he has some assembled UD trucks in the stockyard waiting for chips to arrive before the vehicles can be delivered to customers.

The Ukraine war, and its impact on European components suppliers, is one of many uncertainties. Some effects of the war may become clear only next year, says Van den Heede. Schulz says: “In the past, our industry used to be rocked by one big event every 10 years. Now they come one after the other. It’s very hard to predict the future with any confidence.”

UD’s Rosslyn assembly plant, in Tshwane, has capacity to manufacture about 4,500 vehicles annually on the current single-shift working pattern. This can be doubled with a second shift. UD’s lineup includes the Quon, Quester, Croner and Kuzer truck ranges.

As things stand, UD and its competitors are well short of the production numbers that would require them to invest heavily in production facilities — though the arrival of each new model requires upgrades and new equipment.

Truck manufacturing, in the SA sense, generally means assembling imported kits, with the inclusion of a few SA-sourced parts like glass and tyres. While the average local content value of SA-made local cars and bakkies is about 40% and is required eventually to reach 60%, the truck figure sits at 10%-15%.

Even the global components supply crisis and massive increases in freight rates, which have persuaded light-vehicle companies to urgently look for local components, is unlikely to change much. “We simply don’t have the volumes to justify the investments needed to source locally,” says Van den Heede.

It has been suggested that local truckmakers share common parts so a single supplier can build for everyone, thereby bringing down costs. It’s not as easy as that, says Schulz. Contrary to the occasional perception that because many trucks look and perform similarly, they must be the same under the skin, “modern trucks are very complex”, he says. “Many of their parts are unique.”

That complexity, at least as far as SA is concerned, does not yet extend to electric engines. Some electric commercial vehicles are entering the market for short-haul deliveries, but truckmakers like UD are in no rush to transform their product ranges.

The government is expected to announce its policy on electric vehicles in the next few weeks. Some carmakers may be champing at the bit, hoping that incentives will make their vehicles more affordable, but Van den Heeded reckons it will be another two of three years before electric trucks are anything more than a novelty.

High prices, policy uncertainty, local driving conditions and the lack of electric-battery charging stations all work against short-term action. “Let cars pave the way so we can all see what’s happening, then the truck industry can decide how it wants to follow suit,” he says. “We’re all in the same ecosystem so we can learn from experience.”