What might 2014 hold?
Despite perceived negativity surrounding the economic performance of South Africa and other western countries, the local truck and bus market could very well grow by four percent in 2014.
Forecasting the number of medium, heavy and extra-heavy trucks and buses that will be sold in South Africa in 2014 is not an easy task, but is one that must be undertaken by manufacturers and suppliers of vehicles to ensure that there will be sufficient stock available to meet the future demands of customers. The forecasts need to be as accurate as possible to avoid severe financial implications of over or under stocking.
Looking at our performance up to October 2013, the buoyancy of the truck and bus market surprised many, especially in the extra-heavy segment of the market, which performed exceptionally well. This was mainly due to customers choosing to move their goods by road rather than by rail. The demand for road freight was also driven by the increase of imports that were transported by road from the sea ports to their final destination.
In endeavouring to forecast the size of the truck and bus market in 2014, we have to take cognisance of the economic performance of our global trading partners in the western world, many of which are still experiencing difficulties. The economy in Europe remains sluggish with high unemployment and unsustainable welfare payments. The economy in the United States of America has shown some improvement over the last year but, in my opinion, they are still grappling with many economic problems.
Our recent trading performance with Brazil, Russia, India and China has been good, but has resulted in an unhealthy balance of trade with too many imports and insufficient exports.
The aggressive drive by the Passenger Rail Agency of South Africa (Prasa) to move more of the country’s freight by rail is another factor that has to be taken into account when forecasting the size of the South African truck and bus market in 2014.
In my view, the aggressive drive by Prasa will not drastically affect the size of the 2014 truck and bus market. We may see some segments of this market decline marginally but in others we could see growth. A good example is the growing demand for freight to be transported by road from South Africa to neighbouring countries north of our borders, resulting in an increased demand for new extra-heavy commercial vehicles to service these routes.
The South African economic growth rate remains sluggish (with only two percent growth predicted for 2014) and the rand remains weak. The recent and ongoing spate of strikes and industrial unrest that we have witnessed in the country has to be taken into account. An assessment needs to be made on whether these strikes will continue and, if so, how they will affect the market.
Despite the negative conclusions that could be drawn from the above comments, I remain positive and, in my opinion, the truck and bus market will grow by four percent in 2014. At the time of writing the expected number of medium, heavy and extra-heavy truck and bus sales for 2013 is 28 500 units, therefore adding four percent growth for the 2014 year will result in 29 640 units being sold.
One of this country’s most respected commercial vehicle industry authorities, VIC OLIVER has been in this industry for 49 years. Before joining the FOCUS team, he spent 15 years with Nissan Diesel (now UD Trucks), 11 years with Busaf and seven years with International.