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January–March
sales of new trucks and buses plunge by more than 43% to the
weakest first quarter for five years
by Richard
Proctor-Sims |
HOWEVER INEVITABLE IT MAY
HAVE BEEN, the sharpness of the downturn was still unexpected. The
downturn has removed any remaining hope that Southern Africa might somehow
or other escape a global recession that may be the worst for seventy years.
Although a fall to 2004-2005 levels does not sound very serious, the shock
has been greater as it came after a long period of sustained growth.
Table A shows the consistent
rise and sudden fall over the past five-year period.
The month-on-month decline
between March 2008 and March 2009 was even higher than the quarterly
comparisons – minus 48.8% for medium commercials and minus 53.4% for heavy
and extra-heavy trucks and buses. Earlier this month, Naamsa, the industry
body, described the domestic market as “depressed and increasingly
desperate”. It noted further that “the growing weakness in medium and
heavy commercial vehicle sales suggested a downturn in investment spending .
. . and confirmed that business confidence generally remained under
pressure. The lower sales . . . also reflected the difficulty experienced by
truckoperating businesses in obtaining finance”.
On the other hand, Naamsa
remains optimistic that “government measures should start to lend support
to the domestic market in the the second half of this year”. Our concern
is that there may not be sufficient improvement early enough for promises
relating to infrastructure improvements and public transport to be fulfilled
in time for next year’s Gautrain and other transport projects and the
Football World Cup. It may be difficult, indeed, for South Africa to achieve
pass marks for these important projects in economic conditions that are
likely to remain adverse both nationally and globally. Success will to a
large extent depend on a rapid recovery in the supply and exploitation of
vehicles required for civil engineering and transport operations. Whether
manufacturing capacity could be increased fast enough for what might be a
short-term surge in demand to meet infrastructure and transport targets is
unclear as workers are laid off and inventories run down.
The sector as a whole and the
different vehicle segments are analysed in the comments to Tables 1-5, but
some generalisations might be noted. These include:
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although truck and bus
manufacturers operating in our market may be dependent on parent
companies and other suppliers elswhere in the world, at least one local
company – General Motors South Africa – has already declared its
independence, both financially and as far as product is concerned, from
its US parent
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several manufacturers and
importers have already withdrawn from our market, and others may
follow
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while some manufacturers
have performed much better or much worse than average, no general
strengths or weaknesses can at this stage be linked to one more than
another of our source regions – Europe, North America and Asia
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as the first quarter has
historically been our industry’s weakest sales month (followed by Q4
and Q2, with Q3 usually the best quarter), sales projections based on
four quarters at Q1 levels would be unreliable
The figures in Table B compare
the performance of HCVs (heavies, extra-heavies and buses) and MCVs (medium
commercials) with the lighter sectors of the new vehicle market in the first
quarters of 2006-2009.
Sales of cars led the industry’s decline after Q1 2007, with the other
sectors following. The current declines have so far been in proportion to
vehicle weights, with heavy trucks and buses showing the smallest decline
(about 20%) and cars the largest decline (about 43%) over the period.
Although exports are at this stage of only peripheral interest, it should
still be noted that exports of medium and heavy commercials have also
dropped sharply. While some manufacturers – notably Scania, Nissan Diesel,
General Motors SA and Iveco – did particularly well in export markets in
the full 2008 year – when industry exports totalled 1 197 units – export
numbers were disappointing at the start of 2009.
Summarising future prospects, it is possible that the heavier commercial
segments of the market, having been adversely affected later and so far less
seriously that the car and light commercial sectors, may decline further
before recovering. On the other hand, there remains optimism that the
infrastructure and transport requirements of the rapid transit Gautrain, the
Football World Cup and plans to upgrade public transport in South Africa’s
five metropolises and at international airports may mean earlier relief for
extra-heavy truck and bus manufacturers. Similarly, demand from vehicle
rental companies can be expected to improve ahead of general private vehicle
ownership.
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NOTE
TO TABLES 1-5 The
percentage changes in blue indicate manufacturers whose sales
figures in 2008 were better than the average change compared with
2007.
Comment:
As we have often
commented favourably in the past on the leadership of Mercedes-Benz
in Southern Africa’s medium and heavy commercial vehicle markets,
it is only fair now to point out that if the current industry-wide
sales decline had been as high as in Mercedes-Benz’s case, the
industry would have sold some 450 fewer units into the market in the
first quarter of this year. The market’s weakness has, however,
been slightly reduced by Peugeot’s and Scania’s increased
quarter-on-quarter sales and Volkswagen’s and General Motors’
wellabove- average performances. The number of companies competing
in our market may soon drop to no more than about a dozen from a
recent high of more than twenty. |
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Comment: With Mercedes-Benz again the exception, five of
the six leading medium commercial manufacturers outperformed the
market average. Tata fell from third to eighth position, while Iveco’s
year started badly – in this and all other tables except buses
(Table 5). While Peugeot did not change its place in the table, it
was the only player to sell more units into the market in Q1 2009
than in Q1 2008.
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Comment: The Isuzu division of General Motors SA
retained the leadership it established for the 2008 calender year by
selling more units into the market than it did the year before –
the only manufacturer to do so. Tata, Mercedes-Benz and its sister
company Fuso, as well as Hino were the major players to lose ground,
while the presence of Iveco and Volkswagen was hardly visible –
surprisingly so in Volkswagen’s case after this company’s
excellent performance in the 2008 calendar year.
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Comment: Until now, extra-heavies have been the strongest
segment of our market, but they took the largest knock between Q1 2008
and Q1 2009. While Scania and Volkswagen both reported increased sales
– the only companies to do so – and Navistar, Tata, Isuzu, Volvo and
Mercedes-Benz all had lower than average sales declines, Freightliner
(in fifth position), MAN (third) and Nissan Diesel (second) and the
companies in positions 12-16 all reported higher than average sales
declines. Iveco, indeed, reported only about a sixth of the number of
units it sold in Q1 2008. BMC, ERF and Daf seem to have withdrawn, with
Renault perhaps the next to go.
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Comment: Iveco was the only bus manufacturer to stand out in
the first quarter of 2009: it delivered three times as many units to the
market as it did a year ago. The success of this member of the Fiat
group, which had been a leading supplier of buses to our market until
some twenty years ago, was all the more surprising in the light of this
company’s current very low truck sales levels. Our earlier suggestion
that bus sales might break through the 2 000-unit barrier in 2009 if all
the Gautrain, airport and city public transport upgrading projects were
able to stay on course now looks shaky. Readers should note that there
is a difference of 17 between total sales for the first quarter of this
year and the total of the units allocated to the various manufacturers.
This anomaly will be corrected in the next report.
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Small improvements to the
presentation of this feature are introduced from time to time. If you
have a special request, please email Richard Proctor-Sims on fontein@wold.co.za
The main tables refer to
Naamsa members’ sales of new trucks and buses in South Africa,
Botswana, Lesotho, Namibia and Swaziland the five countries in the
Southern African Customs Union (Sacu). New truck and bus sales by
non-members of Naamsa are not significant. Response Group Trendline ( www.rgt.co.za
), which processes and reports the figures on behalf of
Naamsa, continuously updates anomalies in earlier reporting, and this
can lead to discrepancies between the totals for each table and the figures for individual manufacturers.
Analysis and comment
© 2009 Richard Proctor-Sims fontein@wol.co.za
and Data © 2009 Naamsa naamsa@iafrica.com |
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