FleetWatch Online - 70-NaamsaOct06

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Past Issues

October 2006

Figures, analysis and comment supplied quarterly by
Richard Proctor-Sims

Year-on-year growth rate remains 22%, outstripping the rates for cars and LCVs
by Richard Proctor-Sims

SOUTHERN African customs union sales of all new medium and heavy commercial vehicles above three-and-a-half tons were 21.9% higher for the first nine months of 2006 than for the equivalent period in 2005. The overall percentage increase was unchanged compared with the returns for the first six months.

The sales pattern for the third quarter makes it clear that economic and confidence factors have begun to separate those who buy trucks – mainly businesses – from those who buy passenger and light commercial vehicles (LCVs) – who are largely individuals. Thus:

Individual and company car buyers are being squeezed by (1) higher interest rates, (2) higher steel and other commodity prices and the weaker rand, both of which tend to lead to higher vehicle prices, and (3) continuing high fuel prices.
Commercial buyers of medium and heavy trucks are, on the other hand, able to factor higher capital and running costs into their own prices. These buyers remain, furthermore, more confident than individuals about the economy generally. They are encouraged by the continually increasing demand for freight transport.

Table A illustrates this divergence. Although the growth in sales of passenger cars remains strong, the rate of increase compared with 2005 fell from +18.8% for the first half to +15.9% for the first nine months. By contrast, the sales growth for MCVs and, especially, HCVs remains several percentage points ahead of the average for the whole new vehicle market.

Table A. New vehicle sales comparisons for the first nine months of 2005 and 2006
	2005	2006	Change
Cars	278 339	322 521	+15.9%
LCVs	119 543	137 048	+14.6%
MCVs	8 928	10 678	+19.6%
HCVs	11 202	13 875	+23.9%
Total market	418 020	484 152	+15.8%

Table B shows the quarterly figures and indices for the four sectors of the M/HCV market in the first three quarters of both 2005 and 2006. As well as showing a stronger overall growth in 2005, the comparison makes clear the relative strengths of Q2 2005 and Q3 2006. As the fourth quarter in a normal year is weaker than the third quarter, it will be interesting in a few months’ time to examine the figures for the final quarter of this year in this light.

Table B. M/HCV sales comparisons for the first three quarters of 2005 and 2006, showing unit sales and indices (for each ofthe years Q1 = 100)
2005
	Q1		Q2		Q3
MCVs	2 448	100	3 243	132	3 239	132
Heavy trucks	991	100	1 332	134	1 555	157
Extra heavies	1 858	100	2 200	118	2 535	136
Buses	175	100	250	143	290	166
M/HCV totals	5 472	100	6 936	127	7619	139
2006
	Q1		Q2		Q3
MCVs	3 135	*100*	3 568	114	3 960	126
Heavy trucks	1 471	*100*	1 598	109	1 892	129
Extra heavies	2 065	*100*	2 859	138	3 134	152
Buses	250	*100*	303	121	303	121
M/HCV totals	6 936	*100*	8 328	120	9 289	134

Table C provides a clearer illustration of the cyclical nature of the new truck market. These examples are the four most recent quarters. The third quarter of the year is usually the strongest and, of the two weak quarters, the fourth is usually stronger than the first. In the present illustration, however, heavy trucks were an exception to this general rule between the last quarter of 2005 and the first quarter of 2006.

Table C. Unit sales and indices for the past four quarters (Q4 2005=100 )
	2005 Q4		2006 Q1		2005 Q2		2006 Q3
MCVs	3 315	100	3 150	95	3 568	108	3 960	119
Heavy trucks	1 298	100	1 471	113	1 598	123	1 892	146
Extra heavies	2 360	100	2 065	88	2 859	113	3 134	133
Buses	293	100	250	85	303	121	303	121
M/HCV totals	7 266	100	6 936	95	8 328	115	9 289	128

While these three tables help our appreciation of the general dynamics of the medium and heavy commercial vehicle markets, we must remind ourselves that the main present feature of these markets is that they are experiencing record highs, which a reading of the numbered tables on the previous pages makes clear.

Comment:
The colour entries in this and the other tables indicate manufacturers or vehicle makes whose year-on-year increases were higher than average. Tata’s growth rate has come down from "spectacular" to "very high" and, in the process, it has dropped from second to third position in this totals table. Iveco is having a good run, while Volvo has reduced some of its recent losses. Of the other established players, Tyco, MAN and Nissan Diesel have been growing faster than General Motors, DaimlerChrysler and Toyota/Hino, while Scania has turned to negative growth. At the top of the table, DaimlerChrysler had a very successful third quarter, increasing its growth rate from +4.9% for the first half to +13.5% for the first nine months. Of the new players other than Tata, Gaz and Volkswagen enjoyed very high growth.

Comment:
Toyota has regained its first position in this table. Although no fewer than 15 makes of vehicles are now being sold in this truck category, the first five entries in this table account for some 73% of total sales – slightly down from the almost 77% for the first six months. Although Toyota and Tata remain well clear of the field, Iveco, Nissan Diesel and Isuzu of the established players and Volkswagen and other new players are experiencing higher growth rates. During this quarter, Opel became the latest new player to enter the medium and heavy commercial vehicle markets.

Comment:
Heavy trucks have now enjoyed three successive quarters as the fastest-growing sector of Southern Africa’s new vehicle market (see also Table C). Positioned between medium commercials and extra heavies, heavy trucks, however, still comprise the smallest of the three truck categories. The vehicle makes occupying the top half of this table account for some 88% of total sales in this sector.

Comment:
Although not one of the 10 makes in the table to have experienced above-average growth, MAN has nevertheless closed the gap between itself and its Mercedes-Benz rival to the extent that it sold 84% as many vehicles as Mercedes-Benz did in the first nine months, compared to only 69% as many in the first half of the year. Mercedes-Benz, MAN and the next two players in the table accounted for 56% of the total sales in this sector. Encouragingly for the new players, however, three of these – Tata, Renault and Fuso – together accounted for 11% of total sales. Scania joined its Swedish rival Volvo in experiencing a negative growth rate in the period under review.

Comment:
Daf and Volkswagen are new players in what still remains a smaller market than may be good for a balanced transport system in South Africa. Iveco is again represented in a small way after a long absence from the Southern African bus market.

The tables refer to Naamsa members’ sales of new trucks and buses in South Africa, Botswana, Lesotho, Namibia and Swaziland _ the five countries of the Southern African Customs Union (Sacu). New truck and bus sales by non-members of Naamsa are not significant.