Business

Inge Lamprecht
3 minute read
20 Jan 2017
8:10 am

Another tough year for truckers in store

Inge Lamprecht

Difficult year expected for local truck market, but green shoots are emerging.

The local truck market, which can be viewed as a leading indicator of economic activity, is bracing itself for another challenging year after sales took a nosedive in 2016.

Rory Schulz, marketing director for UD Trucks Southern Africa, says under current trading conditions orders are not flowing to its factory spontaneously – sales teams have to make them happen.

“You have to fight for every unit. So yes, it is in that respect that we say it is going to be a difficult year.”

However, there are green shoots emerging that could provide some relief in the months ahead.

Schulz says after contracting around 2.5% last year, fixed investment is expected to grow 2.2%, while GDP growth should be in the region of 1.5%. Commodity prices are improving, large parts of the country are starting to recover from the drought and the rand has made some gains.

He concedes however that a number of factors remain problematic, including political tension in the country, South Africa’s credit rating issue – which is likely to continue weighing down on business confidence – as well as an expected increase in taxes.

Including exports, UD Trucks expects the truck market to grow by 3% to 28 998 units this year. While growth in the light duty truck segment will likely be muted at 0.6%, the medium- and heavy-duty truck segments should see slightly more activity, with growth of 5% and 3.5% respectively. Bus sales are expected to increase by 6%.

Schulz says some customers have admitted that they have been somewhat “paralysed” in 2016 and have not made decisions to buy vehicles, but they have indicated that they are going to start running their businesses again and do what is necessary.

Reigniting the SA economy

Schulz says somewhere along the line South Africa has lost some of its economic initiative as a leader in the region.

To some extent, this explains why the most sophisticated economy in the region is lagging behind and growing at less than 0.5%, while some of its counterparts – particularly countries in East Africa – are growing in excess of 5%.

While high-growth African countries are building roads, ports, power stations, schools and hospitals to try and sustain the growth and meet the needs of a fast-growing population, South Africa’s National Development Plan is “not really going”, Schulz says.

Although 18 infrastructure projects have been earmarked, traction is lacking and the country is still debating the best way forward in terms of power.

Schulz argues that there is a critical role for business to play in kick-starting the economy. It has demonstrated its expertise in building roads, the Gautrain, hospitals and schools.

It is interesting to note that South Africa is only responsible for about 7% of all construction contracts into Africa compared with China’s 32%, he says.

“Are we not missing an opportunity there? Indeed we are I think.”

Schulz says there are also opportunities for South African businesses in other sectors in Africa, including services, banking, insurance and agriculture.

“Some ambitious regional strategy is required and it has to be driven of course by government, but I think more importantly by us as business people.”

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