THE DEFINITIVE TRUCKING SITE

February 2009

Sales of heavy and extra heavy trucks and buses up 3.4% Sales of medium commercials down 19.3% Combined year-on-year M/HCV sales down 5.9% by Richard Proctor-Sims

THE FINAL QUARTER OF 2008 proved to be even weaker than expected and much weaker than the hopes of many in the industry. The steepness of the downturn is best illustrated by the year-on-year comparisons of the first and second halves. Combined sales of medium and heavy trucks and buses for the first six months of 2008 were 6.4% up compared with the same period in 2007. The second half turned this achievement on its head. Instead of a continued increase or even a small decline, the returns for the second six months were no less than 17.5% down compared with sales in the second half of 2007. Together, the results for the two halves represented a calendar year decline of 5.9%. While the prospects for the industry in 2009 therefore remain generally poor, two of the four sectors we cover have not lost all their glitter. These are extra-heavy trucks (Table 4) and buses (Table 5). By the end of 2008 these two sectors were still in positive territory compared with the results for 2007 – the first by 7.8% and the second by 18.3%. Nothing, however, disguises the fact that the most recent quarter was the weakest for two years for all sectors except buses. (See Table A.) 

Detailed comparisons are in Tables 1-5, which follow on this and the next pages. Table B analyses South Africa’s total new vehicle market, while Table C on the following page analyses the industry’s export performance in 2008. 

The indices for Table B show clearly that car sales led the industry’s decline in 2007, while compared with 2006 car sales had dropped by nearly a third by 2008. As LCV and MCV sales started their decline a year later, their loss in 2008, again compared with 2006, was a much lower 15%. Sales in all the heavier categories were higher in 2008 than they were in 2006. Heavies, however, lost ground compared with 2007. Sales of extra-heavies continued to grow in the first half of 2008 but declined in the second half. Buses were the only sector to see continued growth in the second half of 2008. 

While no more than 0.43% of the 284,213 vehicles exported in 2008 were medium and heavy commercials, the total exports of the market Fleetwatch reviews doubled between 2007 and 2008, helping some manufacturers to cushion lower domestic sales. In this context, “exports” are to countries outside the five-country South African Customs Union – which is soon to be enlarged. Most exports go to neighbouring African countries. Table C presents the details. Of particular interest is Scania’s achievement in exporting more buses in 2008 than it sold within the customs union. 

Turning to the future, there are some who believe that 2008 will prove to have been a low point for the domestic new vehicle industry as a whole – including the medium and heavy commercial sectors of concern to the readers of Fleetwatch. The present consensus, however, is that sales will decline further in 2009, with 2010 being unclear. For 2010 the consensus is split. 

One view is that the infrastructure and public transport demands associated with Gautrain and the 2010 World Cup will increase the demand for cars, heavy commercial vehicles and buses, although not necessarily for light and medium commercials.

The second view is that nothing – not even the World Cup plus Gautrain – will restore the local economy until 2011, or perhaps even 2012. Which view do you support? We would like to hear from you on this, particularly on how you think that economic and confidence factors will impact on your own business prospects.