THE DEFINITIVE TRUCKING SITE

October 2008

January-September 2008 sales of new M/HCVs are just 1.1% ahead of the total for Q1-Q3 2007  by Richard Proctor-Sims

IN OUR LAST REPORT (July 2008), we noted that “all eyes will be on the returns for the third quarter” – to confirm or contradict the trend for the full year. The results of this quarter reduced the 6.4% gain for the first half of 2008 compared with the same period in 2007 to one of only 1.1% for the nine-month period. If this trend were to continue in Q4, the combined sales of medium and heavy commercials would be 4-5% less than they were in calendar 2007. The seven-year growth cycle – the longest on record – would then come to an end. If, however, some strength remained in the total market, for which there is some evidence, the year would still end in the red, but only by one or two percentage points. The projection in blue in Table A illustrates this possibility. 

Detailed comparisons are in Tables 1-5, which follow. The effect of the favourable Q4 2008 projection would be total sales for the year of 36,667 units, or 1.1% less than the 37,069 for the previous year. Throughout the year, extra-heavies and buses have outperformed the lighter categories. In itself, this trend is a guide to the underlying strength of the economy, with extra-heavy vehicles carrying increasing tonnages of long-distance freight and buses being bought at a higher rate than before in the build-up to Gautrain and 2010. 

Table B illustrates the firmness of the M/HCV market in the context of the overall vehicle market. At two extremes, extra-heavies performed twice as well as the car sector between 2006 and 2008, the first achieving sales 40% higher than in 2006 and the second selling only 70% of the 2006 figure. 

A year ago, we wrote that the outlook for medium and heavy commercial vehicle sales in 2008 was “not unfavourable”. Our forecast then was that “while a new record year may not be in sight, we expect 2008 sales to be not far below” those of 2007. However, we then expected our markets to improve again after 2008 – “prospects seem favourable for a new record year in 2009 or 2010”. A year later, an upturn seems unlikely in 2009, but quite likely in 2010.

In the light of the recent resignation and reappointment of finance minister Trevor Manual, it’s perhaps also worth recalling the following words from the July issue: “. . . 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.” 

South Africa’s growing importance as a vehicle exporter is also worth discussing in the present context. Although there have already been layoffs by some vehicle manufacturers – with more expected – the relative stability of the car and light commercial vehicle plants in the face of the steep decline in domestic demand is attributable to the country’s vigorous and successful export programme. In a 2 October statement, Naamsa noted that “with three quarters of 2008 accounted for, export sales reflected an impressive year-onyear improvement of 72.7%” and that “vehicle exports for 2008 as a whole were projected to reach about 280,000 units”. 

While more than 99% of the 208,505 vehicless exported in the first three quarters of 2008 were cars and light commercials, an analysis of the heavier vehicles exported is not without interest, especially as this admittedly small number is 80% more than the comparative figure for 2007. Almost all the manufacturers export to some extent, but – to take just one example – Scania, the leading M/HCV exporter, has so far this year exported more buses (189) than it has sold on the domestic market (154). Details in Table C. 

Comment: In this, the most successful and most important segment of the M/HCV market, the nine longest established marques, occupying positions between 1 and 11, accounted for a combined 81% of the segment’s total vehicle sales and showed year-on-year growth of 26% - or 10% more than the average for the table. The other eight players saw their combined market share shrink from 26% in 2007 to 19% this year. Together, they experienced a 4.1% year-on-year loss. Mercedes-Benz South Africa’s three divisions - Mercedes-Benz itself, Freightliner and Fuso - between them now account for 35% of all extra-heavy sales - up by one -sixth from their combined 30% a year ago.

Comment: What had recently become a three-horse race now has five serious runners. Iveco, a member of the Fiat group, was a leading supplier of buses to this market until a decade ago, while Volkswagen has emerged as a strong contender. As well as selling well in the Southern African market, Scania and Volkswagen are major exporters of buses (see Table C). We see bus and coach sales easily breaking through the previous 2000-a-year barrier as South Africa sets about closing the people transport gap between itself and developed countries to meet the demands of 2010 and to optimise the other transport modes, including Gautrain and the three main international airports.

 

 

Small improvements to the presentation of this feature are introduced from time to time. If you have a special request, please contact Richard Proctor-Sims on fontein@wold.co.za The tables refer to Naamsa members’ sales of new trucks and buses in South Africa, Botswana, Lesotho, Namibia and Swaziland ? the fi ve countries that make up the Southern African Customs Union (Sacu). New truck and bus sales by non-members of Naamsa are not signifi cant. Response Group Trendline (www.rgt.co.za), which processes and reports the fi gures 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 fi gures for individual manufacturers.  Analysis and comment © 2008 Richard Proctor-Sims ? fontein@wol.co.za ? from whom further information is available. Data © 2008 Naamsa ? naamsa@iafrica.com