Truck Market Set for More Growth in 2012

19 January 2012 | Print

The South African truck market is expected to grow by 12.3% to 29 358 units during 2012, indicating a slight decline from the 17.39% growth experienced in 2011.

The South African truck market is expected to grow by 12.3% to 29 358 units during 2012, indicating a slight decline from the 17.39% growth experienced in 2011.

According to Johan Richards, CEO of UD Trucks Southern Africa, one has to keep in mind that the market came off a low base in 2010 which boosted sales in 2011, inflating last year’s growth considerably.

The star performer in the local truck market was the Extra Heavy Vehicle segment, which increased sales on a year-on-year basis by 35.41% to 11 503 units. Sales in the Medium Commercial Vehicle segment increased by 15.3% to 8 713 units, while a 5.69% growth was experienced by the Heavy Commercial Vehicle segment to reach a total of 4 664 units. Bus sales predictably declined, by 37.6%, to 971 units.  (Figures according to results released by the National Association of Automobile Manufacturers of South Africa (Naamsa), AMH sales not included due to no reporting in 2010; December results for Mercedes Benz not disclosed by the manufacturer).

“Despite several negative factors that could possibly affect the market over the medium to long term, the 2011 sales results showed that market still has a lot going for it,” said Richards. 

The Year Ahead

Richards said that a number of factors will impact the sale of trucks in the year ahead; including the potential implementation of the e-toll system on Gauteng’s roads and its impact on transport companies’ operating costs.

“Business confidence levels hovered around the 100.4 mark at the end of 2011, and will continue to be a key indicator of the health of the truck market in 2012,” said Richards.  “External influences, like the Eurozone crisis, are also continuing to have a negative impact on local growth including job creation, exports and subsequently truck sales.”

Richards said that the company is expecting some growth in the second half of 2012, as the US economy is expected to regain some momentum and record some steady growth.

The Road versus Rail conundrum is also continuing, with Transnet’s recent purchase of 143 new locomotives and the announcement of a new R17 billion route through Swaziland, expected to slowly start impacting the sales of Extra Heavy Commercial Vehicles as the new projects are implemented.

“Of course, oil supply and pricing will always impact the local economy, and the only question is how much of an effect it will have on South African truck sales and transport operators’ costs,” said Richards.

In addition, he said, that on the product side, one should see a lot more focus on efficiency, mainly as a direct result of increased costs across the board. Owners will also be looking to reduce fuel consumption, as well as maintenance and service costs.

On the transport side of things, the company is of the view that long haul vehicles will be used to maximum capacity and that the construction industry should improve considerably during 2012 after hitting quite low levels early in 2011. 

“We believe that the EHCV segment will start to slow down in the latter part of 2012. We also expect the HCV market to perform well in 2012 after a sluggish run in 2011. Now that the market has replaced their EHCV long haul vehicles, we should see an increase on the HCV side, especially for local deliveries. The Bus market should pick up slightly, but not by much, depending on how the government implement various BRT systems countrywide during the course of the year,” explained Richards.  

On a year-on-year basis, UD Trucks Southern Africa is forecasting the Medium Commercial Vehicle segment to grow by 11.13% to 9 812 units. Sales in the Heavy Commercial Vehicle segment is expected to grow by 17.95 units to 5 525 units, while a total of 12 932 units is expected in the Extra Heavy Commercial Vehicle segment – a forecasted growth of 10.96%. The Bus segment is expected to improve during 2012, by 10.45%, to 1 089 units.

“We also foresee a number of possible price increases on trucks in January 2012, as a result of the adverse effect of exchange rates on the local market,” said Richards.  “Subsequently, we also believe that competition will increase amongst market competitors due to greater product parity, with after sales support and service set to play an increasingly important role in the whole buying cycle.”


UD Trucks remained the country’s top truck exporter in 2011, exporting a total of 244 units into Africa.  The total export market came to 861 units, a decline of 6.5% when compared to 2010’s results.

“If Europe Zone debt crisis remain stable, we foresee a very good year in the African export countries after a rather sluggish 2011,” said Richards.  “Local manufacturers that export into Africa, like UD Trucks, will be very excited if the Rand could strengthen to around the more ideal R8.30 level.”

Richards said the company is continuing to expand its dealer network across the continent, and believes that the quality of their dealerships and the level of sustainable support they provide along the major routes in sub-Saharan Africa, are the key driving forces behind their successful sales performance over the last number of years. 

UD Trucks Southern Africa has dealers in Angola, Botswana, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Seychelles, Swaziland, Zambia, Zimbabwe, and is currently investigating a number of opportunities for expansion across the region.

UD Trucks’ Local Performance

On the local front, the company increased year-on-year sales by 27.67% to 3 234 units, retaining its third position in the market with a 12.5% market share. The company is forecasting around 4 000 sales in 2012.

During the course of the year, the company will also be launching a new generation Quon Extra Heavy range, and is in the process of planning new introductions in 2013, 2014 and beyond.  

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