A sharp increase in fuel tax, triggered by government’s drive to fill its coffers, a stronger oil price and a continued weak rand may lead to a roughly R2/ℓ increase in the price of fuel in the next few months, predicts Isuzu Trucks South Africa (ITSA) director and COO Craig Uren.
This will have a significant effect on the operating costs of road-based transport operators, he adds.
The rising cost of fuel is also one of the driving factors in the current truck replacement cycle, as operators continue to seek more fuel-efficient vehicles.
The fuel price is not the only cost factor operators have to consider when buying a new truck. New-truck prices increased by between 10% and 15% last year.
On a truck with a price tag of R1-million, 15% is quite significant, notes Uren.
This year will most likely bring increases of its own.
“We’ll have to see how it plays out.”
Uren says sales in the new-truck market in 2016 reflected global and domestic economic and political uncertainty.
The South African new-truck market was down 11.3% in 2016, to 27 011 units, compared with the 30 469 units sold in 2015.
The medium commercial vehicle (MCV) market showed the biggest decline, at 18.9%, with the drop in sales in the heavy commercial vehicle (HCV) segment at 4.9%, and 10.5% in the extra-heavy commercial vehicle (XHCV) segment. Bus sales provided the only positive, with sales up 13.8%, compared with 2015.
Uren says the sharp decline in the MCV market shows that the market was hardest hit at the bottom end, with a significant number of small enterprises – especially in the mining sector – most likely failing to secure finance for a new vehicle or closing their doors.
“The big fleets have capital expenditure; it was the little guy that took a big hit in 2016.”
ITSA predicts a new-truck market of 27 500 units in 2017, which will be a 1.8% improvement on the 2016 number.
Uren says it is difficult for truck sales to grow in a low economic growth environment.
ITSA forecasts that sales in the MCV segment will decline by 1.6% in 2017, with sales in the HCV segment to grow by 1.3%. The XHCV market is likely to expand by 4.5%, with bus sales possibly up 2.1% in 2017.
ITSA achieved a market share of 14.5% in 2016 (with sales of 3 952 units), compared with 14.9% in 2015 (4 550 units).