FleetWatch - 77-Truck Sales July 2008

Extra-heavies shine as total first-half M/HCV sales now only 6.4% up on last year’s figures

by Richard Proctor-Sims

ALTHOUGH STILL MUCH STRONGER than the lighter segments of the new vehicle market, sales of medium and heavy commercial vehicles (M/HCVs) have shown their first real softening since 2000. Medium commercials have registered an actual decline, but on the other hand sales of extra-heavy trucks continue to forge ahead. Tables A and B summarise recent trends. Table A illustrates the almost uniform slowdown in the rate of growth over the past five years. Table B carries an even more powerful message. Historically, the second quarter is much stronger than the first, but this year there have been some actual declines, although the strong performance of the extra heavies has ensured a slightly improved overall average. All eyes will be on the returns for the third quarter.

A notable feature of the numbered tables which follow is that in today’s more difficult market more buyers are putting their trust in the longerestablished manufacturers. So, for example, sales of Mercedes-Benz, Toyota-Hino, General Motors- Isuzu, MAN and Iveco have grown at above the industry average. Exceptions have been Nissan Diesel and the Swedish manufacturers Volvo and Scania. Sales of International – now Navistar International – and other marques under the Tyco umbrella have been much softer, with Daf not having reported for several months. Although still in fourth position in the totals table, Indian manufacturer Tata continues to lose ground compared with its recent historic highs.

While medium and heavy trucks and buses have never been exported in high numbers, it should be noted that Scania sells a high proportion of its trucks and buses to countries outside the Southern African customs union.

While remarkable, the continued strength of the extra-heavy truck market has not surprised industry insiders. Indeed, both operators – especially long-distance hauliers – and manufacturers believe that Southern Africa’s lower than average transport cost inflation has been the result of strong investment in the improved operating efficiency of new transport equipment.

The continued success of all the divisions of Mercedes-Benz, South Africa’s leading truck and bus manufacturer, is easily taken for granted as the company stays at the top of various tables. But every so often we need to remind ourselves of the company’s strength. For the first six months of 2008, Mercedes-Benz sold 27% of all new trucks and buses – an increase of more than three percentage points compared with its 2007 performance. Its share of new extra-heavy truck sales has grown even more impressively – from 30% of the total for the first six months of 2007 to no less than 35% in the first half of 2008.

Another German manufacturer, Volkswagen, has sprung to prominence in the markets we report. Until recently not represented at all, Volkswagen now features in all our tables and is in eighth position overall.

But what of the future? With South Africa – and much of the rest of the world – hovering on the edge of recession, the transport industry cannot remain unscathed. If, however – and nothing is certain – South Africa completes the required infrastructure for the 2010 Football World Cup and indeed retains the right to host this event – which may mean apologising for and finding solutions for the antipathy towards foreign residents in our country – South Africa may recover more quickly than many other countries from the economic setbacks on many fronts.

In this regard, the staying power of Trevor Manuel seems important.

Comment: The colour entries in this and the following tables indicate manufacturers whose year-on-year increases were higher than average. At the top of the table, Mercedes-Benz South Africa’s three truck divisions – Mercedes-Benz itself as well as Freightliner and Fuso – have, as indicated in the introductory text, increased their dominance and now account for more than 27% of total sales. In another comparison with the totals table for the full 2007 year, Volkswagen has climbed rapidly to eighth place, ahead of Tyco, Volvo and Scania. At the bottom end of the table, the imminent departure of Ford, Gaz and BMC-ERF is likely to reduce the numbr of players to 15, or perhaps even fewer in the next twelve months or so.

Comment: Sales of new cars were the first to be affected by South Africa’s present economic decline. Light commercial vehicles – pick-ups and vans – soon followed suit, and now medium trucks and vans (MCVs) have for the first time in many years reported negative growth. Nissan Diesel and Tata have been most affected, while, on the other hand, two manufacturers in the middle of the table – Iveco and Volkswagen – seem worth watching. Iveco, which has shown general improvement in the past year, is now in seventh position in Table 1, while Volkswagen is a new player whose growth in a few short months could almost be described as sensational.

Comment: Combined sales of Hino, Nissan Diesel, Isuzu and Mercedes-Benz’s two divisions represent more than 80% of total heavy truck sales, with Hino on its own accounting for one of every four sales in this category. As Table A shows, this is the truck segment that has grown the fastest over the past five years. Sales in the first half of 2008 were 119% higher than the figure for the first six months of 2004. This compares with 111% for extra heavies.

Comment: South Africa’s important premium truck segment continues its aboveindustry- average growth. For the first time, two Mercedes-Benz South Africa divisions are at the head of the table, with Freightliner having shown remarkable growth. More than half the players in this table recorded above average growth, with Nissan Diesel, which has performed less well this year in other vehicle categories, being one of these. Iveco, Hino and Fuso – none of them traditionally major players in the premium truck category, have all performed well this year. As recorded earlier, Daf has not reported since February this year.

Comment: Our report three months ago that the level of new bus and coach sales may be increasing significantly in the light of the public transport requirements for the 2010 World Cup seems to have been borne out by a high sales level in the second quarter. The strong showing by Volkswagen, Iveco and Daf should also be noted. In addition to its sales in the common market, Scania continues to export a substantial part of its production.

The tables refer to Naamsa members’ sales of new trucks and buses in South Africa, Botswana, Lesotho, Namibia and Swaziland - the five countries that make up 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. This process can lead to small discrepancies between the totals for each table and the figures for individual manufacturers.

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