Sep 19, 2012
MAN Finance says default levels could rise in SA in 2013Back
Engineering|Hannover|Absa|Africa|Mining|Trucks|Africa|Europe|France|Germany|Italy|South Africa|Spain|Joachim Ewald|South Europe
© Reuse this
Speaking to Engineering News Online at the IAA Commercial Vehicles fair in Hannover, in Germany, on Wednesday, he said indications from the South African arm of MAN Finance over the “last two, three months” were that economic conditions across all truck-buying industries were deteriorating, with an increasing number of customers overdue on their payments.
Around 40% of MAN truck sales in South Africa were financed through MAN Finance, which operated in joint venture with Absa. South Africa was the third-biggest market within the MAN Finance portfolio.
Ewald noted that repossessions under South African legislation following payment defaults were “problematic” for MAN in Germany, as it could take more than a year to have the vehicle returned to the truck group. In Europe the process took around four months.
Ewald said around 1.5% of the South African MAN Finance book value was currently at default level, which was down from the previous level of 2% seen during the recession three to four years ago.
However, it appeared as if the default value could again rise to “1.7% to 1.8%”.
In Europe, the default level was by-and-large far below 1%, with Germany at 0.5%, and France at around 1%. The average worldwide was 0.8%.
However, South Europe was fast turning into the black sheep of the truck family, with default levels in the struggling Italian and Spanish economies at 5%, noted Ewald.
Some Italian cities, he said, were 360 days overdue on their bus payments.
“We are seeing many Italian municipalities running out of money. They are moving money around to make payments.”
Ewald said he was “not happy” about current default rates, including in South Africa, but added that he was “also not worried”.
“What is worrying is truck volumes. In Italy and Spain truck volumes are not even a third of what they were three, four years ago. The Spanish truck market is now smaller than the Belgian truck market.”
As Europe continued to struggle with high levels of debt, Ewald said the truck industry had to adapt to this new-look, smaller market.
“Will the markets recover? We hope they will, but we don’t know when.”
Ewald said MAN Finance was in a good position to ride out the storm, as the company and many of its customers had learned a few tough lessons during the global recession of 2008 and 2009.
“Our customers are more stable. Their businesses are more stable. They are able to accommodate a 5% to 10% reduction in their business and still survive.”
He added that MAN Finance was also promoting more flexibility among its customers, motivating them to, for example, buy only 80% of the trucks they required, and securing the other 20% in a short-term, flexible arrangement. Should business then slow significantly, operators can return the trucks they do not own.
Ewald said he was aware that not all industries could adopt this model, for example the mining industry, but that it could work for the distribution industry, for example.
Edited by: Creamer Media Reporter© Reuse this Comment Guidelines (150 word limit)
Other Automotive News
Article contains comments
Updated 18 minutes ago Suggesting market-share gains by the retail group, Massmart CEO Guy Hayward reported on Wednesday that the company had managed to grow its sales by 9.5% in the first 20 weeks of this year, despite “intense” competition in the retail sector. Comparable sales grew 7.4%...
Updated 21 minutes ago The installation of an R8-million roof-mounted solar photovoltaic (PV) energy harvesting system by diversified South African agribusiness BKB is set to provide energy to, and reduce the carbon footprint of, South Africa’s wool and mohair industry, in Nelson Mandela...
Updated 1 hour 16 minutes ago Tanzania's government has agreed a deal to buy back a 35% stake in a state-run telecoms company from the local subsidiary of India's top mobile carrier Bharti Airtel for 14.6-billion shillings ($7.07-million), a senior official said. The east African nation says...
Recent Research Reports
Steel 2015: A review of South Africa's steel sector (PDF Report)
Creamer Media’s Steel 2015 report provides an overview of the key developments in the global steel industry and particularly of South Africa’s steel sector over the past year, including details of production and consumption, as well as the country's primary carbon...
Projects in Progress 2015 - First Edition (PDF Report)
In fact, this edition of Creamer Media’s Projects in Progress 2015 supplement tracks developments taking place under the Renewable Energy Independent Power Producer Procurement Programme, which has had four bidding rounds. It appears to remain a shining light on the...
Electricity 2015: A review of South Africa's electricity sector (PDF Report)
Creamer Media’s Electricity 2015 report provides an overview of State-owned power utility Eskom and independent power producers, as well as electricity planning, transmission, distribution and the theft thereof, besides other issues.
Construction 2015: A review of South Africa’s construction sector (PDF Report)
Creamer Media’s Construction 2015 Report examines South Africa’s construction industry over the past 12 months. The report provides insight into the business environment; the key participants in the sector; local construction demand; geographic diversification;...
Liquid Fuels 2014 - A review of South Africa's Liquid Fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2014 Report examines these issues, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing, competition in the sector, the...
Water 2014: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2014 report considers the aforementioned issues, not only in the South African context, but also in the African and global context, and examines the issues of water and sanitation, water quality and the demand for water, among others.
This Week's Magazine
While economic forecasts for the African continent are most favourable, African airlines may not be able to benefit from the expected growth in the region’s gross domestic product (GDP), International Air Transport Association VP: Africa Raphael Kuuchi has warned....
The Automotive Production and Development Programme (APDP) will need to change substantially post 2020, says Metair Investments South African operations COO Ken Lello. “We must not make tweaks. We have to change. What we are doing is not sustainable.”
Banking group Absa’s forecast is for the rand to end the year at around R13 against the dollar, weakening further to R13.50 by 2016, says Absa sectoral analyst Jacques du Toit. He warns that possible interest rate hikes in the US may see capital being pulled from...
The Dispute Resolution Centre at the Bargaining Council for the Civil Engineering Industry (BCCEI) is now open to handle party-to-party disputes. The BCCEI represents the interests of all level four to nine Construction Industry Development Board companies.
Communications technology firm Ericsson sub-Saharan Africa head Fredrik Jejdling says the company’s commitment to sustainability and corporate responsibility has been integrated into all facets of its operations, which has provided it with sustainable revenue...