| Past
Issues |
February
2005 |
| DaimlerChrysler
Commercial Vehicle Division |
|
 |
Confident but many
industry challenges ahead
With an exceptional 2004 year-end close that saw DaimlerChrysler South Africa (DCSA) retain its strong market leadership position, I am confident that DCSA will further strengthen its position in 2005.
Last year was the best year for new truck sales since 1981 and I predict that the positive economic trend will see sales of new trucks remain strong in the foreseeable future. The performance of the CV market is regarded as one of the best indicators of the health of the local economy and in 2004, the positive interest rate developments, growing business confidence and significant investment in infrastructure and civil projects all resulted in increased truck sales in all segments.
DaimlerChrysler maintained its strong market leadership position, ending 2004 with sales of 4 782 commercial vehicles in the over 3,5 tonnes segments. This represented 23% of the overall market of 20 820 units. The performance of the very competitive extra-heavy segment was one of the highlights of the year, growing by 74% from 4 316 units in 2002 to 7 496 units in 2004. DaimlerChrysler dominated this segment with 31,6% market share.
Freightliner also performed particularly well in this segment, with sales of 369 units representing a 53% increase over 2003. This great performance in the extra-heavy segment was enhanced with a spectacular 2 000 Mercedes-Benz commercial vehicle sales result representing a 26,7% share of market.
Following its wider product offering towards end of 2004, DaimlerChrysler SA enters 2005 with its biggest range of vehicles ever, covering the entire commercial vehicle spectrum. The local introduction of Japan's top selling FUSO range in 2005 will give us wider exposure to the heavy commercial segment and will help Mitsubishi further build on the successes of the Canter.
Dealer network
One of the pillars of the success of DCSA is the extensive dealer network dedicated to the commercial vehicle market. We will ensure that we maintain and improve on the excellent customer support levels that we have delivered in recent years.
DaimlerChrysler is undergoing extensive investment and development and 2005 will see state-of-the-art facilities open throughout the country. The year will also see the full implementation of the new Parts Distribution National Inventory (DNI) system, which will further improve the availability of parts to operators nationally.
In addition, the DaimlerChrysler dealers, together with DaimlerChrysler, have created the 'DaimlerChrysler Black Economic Empowerment Foundation' which will provide support for empowerment investors throughout our dealer network.
Ikhwezi opportunity for employment and BEE
Ikhwezi Trucktech is a Black Economic Empowerment company formed more than two years ago to take over the running of the former DCSA Commercial Vehicle production facility in East London and to assemble trucks on a CKD and SKD basis under license to DaimlerChrysler.
Ikhwezi Trucktech offers a flexibility customization hub and is set to become a major player in the automotive industry. Recently winning an Empowerdex A-rating confirms the fulfillment of the seven criteria of ownership, management, employment equity, skills development, preferential procurement, enterprise development and corporate social development.
Ikhwezi Trucktech has successfully undergone its audit for the International Standards Organisation (ISO) 9001/2000 certificate which certifies that the plant's system and processes are world-class.
General transportation issues
Transportation of goods via rail, road and air remains a critical component of the economy of Southern Africa. Service levels in rail transportation have been deteriorating, resulting in a goods transportation move from rail to road. This shift has placed an additional burden on the country's already stretched road capacity, impacting both on the volume of road traffic and the physical infrastructure.
General trends have shown that the road infrastructure is in a state of decline due to poor maintenance. The necessary infrastructural development has not kept pace with the additional volume demands.
On the law enforcement front, efforts are being made to reduce overloading. This has not as yet been fully filtered into good transport practice. This is also particularly noticeable in sub-Saharan Africa, where gross overloading appears to be rife.
In terms of an orderly operating environment, it appears as if the level of bribery in countries to the north of South Africa is significant, with many operators cautious of moving loads through these regions.
A further issue with respect to cross-border traffic from a South African perspective is the lengthy delays at border crossings, which has a negatively impact on transport operations. Typically a vehicle combination in one country is not legal in another, creating much frustration and additional burden on transporters.
The local transport operators industry has a broad spectrum of players, ranging from owner-drivers having one truck each to professional operators with large fleets in excess of 1 000 units.
European vehicles dominate the South African market, although both American and Japanese-sourced product continue to play an important role. Infrastructure for sales, service and parts is particularly well developed, with most manufacturers having good factory support in the country.
Due to the high levels of technology used in modern commercial vehicles, the need for "up-skilling" of technicians and operators has become essential.
The South African Custom Union has a ban on the importation of used trucks, which appears to be effective. However, north of our borders, used trucks imported from the USA and Europe are dominant. These products are inexpensive and freely available. They are, however, not well suited to African operating conditions and the problem of frequent breakdowns is exacerbated by high maintenance costs and poor parts availability. The danger also exists that Africa becomes a dumping ground for First World used trucks - something that should be avoided.
Public Transport is generally in a poor state throughout the region. South Africa is struggling to create some form of subsidy for its taxi industry (taxi typically being a 16-seater microbus) through the creation of a recapitalisation programme. In addition, current bus operators with fleets of 60-65 seater buses enjoy subsidisation from Government. The subsidy system is currently under review and a new policy needs to be established.
HIV/AIDS affecting the transport
Sadly, HIV and AIDS is a scourge that is hitting road transport. Not only are the truck drivers the "conduit" of the virus throughout Africa but the impact on them directly and indirectly is also alarming. Availability of good qualified drivers is poor, with vehicle manufacturers introducing automated gearshift systems and ergonomically designed cabs for comfort, in an effort to create a larger pool of drivers.
Opportunities for skills development
DaimlerChrysler has developed a Driver Training Academy aimed not only at driver training, but also at trainers of drivers with a view to creating additional capacity and professionalism.
Other training programmes are being instituted within the company to further uplift the skills of students to operate within the corporate environment. These successful programmes focus on the industry as a whole and expose the graduates to the various levels of expertise at DCSA.
GEOFF DU PLESSIS ... exceptional 2004 |
Quality of diesel
Another issue impacting on vehicle operations is the quality of diesel available locally. Typically, high levels of dirt in the fuel, high sulphur levels and poor lubrication all negatively impact on diesel engines, resulting in unnecessary high maintenance costs.
In conclusion, DaimlerChrysler and its dealer network are well represented throughout Africa and are committed to supporting the operators of their products through an extensive service and parts network. In addition, engagements with governments take place to inform policy-makers of the impacts of various options and to provide positive support for various initiatives. These include not only technical subjects, but also social issues such as HIV/AIDS, skill development and the like.
Geoff Du Plessis
Management Board Member Commercial Vehicles
Daimler Chrysler South Africa
