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South Africa’s truck market growth cycle coming to an end, Isuzu warns

14th August 2015

By: Irma Venter

Creamer Media Senior Deputy Editor

  

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South Africa’s truck market may end the year at around 29 000 units, 5% to 7% down on last year’s numbers, says Isuzu Trucks South Africa (ITSA) COO Craig Uren.

Around 31 500 trucks were sold locally in 2014.

At the beginning of the year, there was a consensus among auto industry analysts that the domestic truck market would remain flat in 2015 compared with 2014, or show modest growth at around 2%.

At the end of June, however, the truck market was down 5% for the first six months of the year, compared with last year.

The medium commercial and extra-heavy commercial markets declined by 7.5% and 7.3% respectively, while the heavy commercial segment grew 5.5% year- to-date, with the bus market flat compared with 2014.

“A particular concern has been the rapid decline in the truck market in the last three months,” notes Uren.

“We seem to be entering the end of a growth cycle that started in 2009.

“We are very much in a replacement market at the moment.”

Uren says the South African economy is not growing sufficiently to drive truck sales, with power woes at Eskom and the continuous poor performance at many other parastatals doing nothing to steady the ship.

“I think we will be lucky to get 1% economic growth this year. It is a perpetual hard grind to get something out of the South African economy.”

The local economy currently experienced little investment, no job growth and a sharp increase in costs.

Uren says the economic crisis in Greece also shows that South Africa needs to “get its budget deficit under control”.

Proposed tax increases will most certainly affect the local truck industry, he adds – “the question is how?”

Despite ITSA also having to negotiate a “few sharks in the water”, Isuzu Trucks’ sales have increased by 20% for the first six months of 2015, compared with 2014.

ITSA’s full-year market share in 2014 was 12.9%, increasing to the current 13.3%.

ITSA this year expects to achieve a milestone of 30 000 units produced at its Port Elizabeth plant since the formation of the company in 2007.

The plant assembles around 4 000 units a year.

A roughly 30 000-unit annual domestic truck market ensures that all major local truck assemblers can continue their operations without too many challenges, says Uren.

However, he concludes: “If we are to preserve employment in a period where the economic pressures in our country continue to be a challenge to business and consumers, a very realistic approach to market expectations for 2015 and 2016 is needed to plan the assembly operations in our industry.”

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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