Truck sales steady despite global market turmoil

With fears of a collapse of the European currency, spurred by debt crises in several Euro-zone countries [Greece, Italy, Spain], commercial vehicle manufacturers [OEMs] in South Africa are bracing themselves for a possible ‘double-dip’ recession in 2012.

“Despite improved year-on-year truck sales figures during 2011, compared to 2010, borne largely on the back of substantial foreign and government investment in infrastructural development projects, negative currency exchange rates against the rand and threats of nationalisation of the local mining industry do pose a real threat to the sustained recovery and growth of the truck transport industry,” says MAN Truck & Bus SA deputy CEO, Bruce Dickson.

While bearish tendencies may characterise the commercial vehicle market in early 2012, positive growth in the extra-heavy truck segment during November this year does indicate that this sector is exhibiting a sustained growth trend, registering a year-to-date increase in new vehicle sales of 39.5%, compared to 2010.

The heavy truck segment has thus far notched up improved year-to-date sales of 8.5%, compared to 2010, while the heavy bus sector [above 8500kg] continues to suffer declining year-on-year sales volumes around 35% industry-wide.

According to Naamsa, “The low interest rate environment and corresponding lower debt servicing costs, declining new vehicle prices in real terms, the competitive trading environment and new model introductions should support domestic sales over the medium term. Growth was anticipated however to be at a more subdued rate in line with the overall performance of the South African economy.”

The export environment for locally-assembled heavy trucks and buses continues to improve, with local OEM dealer networks expanding their operational reach in several sub-Saharan countries. MAN exports of extra-heavy trucks, for example, rose by an impressive 567% in November 2011, compared to November 2010. MAN bus exports rose by 36.4% in November this year compared to the corresponding month last year.

However, In light of extreme volatility in international financial markets, Naamsa adds that, “prospects of slower global growth, particularly in developed economies, could impact on industry export sales going forward.”

For MAN’s Dickson, “mitigating the risk of supply-chain interruptions as a result of fiscal-driven catastrophes abroad should be a primary objective for local OEMs at this juncture. Inventories of both new vehicles and spare parts should be ramped up to avoid shortfalls in meeting market demand next year.”