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A market beset by problems

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A market beset by problemsHow many new trucks and buses are going to be sold next year? Here is our 2016 truck and bus market forecast

FOCUS has provided a yearly truck and bus sales forecast for the past ten years. The forecasts have been fairly accurate and have assisted truck and bus manufacturers to establish their own sales forecast and business strategy.          

We are living in troubled times, with so many unknown factors and global financial and political instability. It has, therefore, become very difficult to provide an accurate forecast for the number of new medium, heavy, extra-heavy trucks and buses that will be sold in South Africa during 2016.

Most truck and bus manufacturers and dealers operating in South Africa have a lead time of approximately four to five months from the date that they place their orders, to the date that the vehicles are available for sale. It is, therefore, extremely important to get the forecast as accurate as possible; to ensure that there will be sufficient vehicles available to meet the market demands without overstocking.

Looking back at the 2015 market, trucks and buses sold well during the first and second quarter of the year. At that time, it looked very likely that sales would meet the average industry estimated forecast, but, due to a slowdown in sales in the third quarter, many manufacturers have had to readjust their original sales forecasts.

At the time of writing, the market indicators reflect a total medium, heavy, extra-heavy and bus market of 29 000 vehicles for the 2015 market. This is two thousand vehicles less than the average industry forecast for the year – which was estimated to be 31 000 new vehicles sold.  

Looking forward, many factors are likely to slow down the sale of new trucks and buses. These include:

• There are no clear signs of a sustainable recovery in the sluggish world economy;

• The government’s announcement of an expected growth in gross domestic product (GDP) of only 1,5 percent in 2016. For the truck and bus market to grow in South Africa, GDP growth should be in excess of 3,5 percent;

• The government’s plans to reduce spending on infrastructure in 2016;

• Eskom’s inability to provide an uninterrupted supply of power for new businesses;

• Student unrest;

• The country’s high rate of unemployment;

• The falling value of the rand;

• The increase in new vehicle prices;

• The reduced potential of operators and businesses to afford to buy new vehicles.

On the positive side, the political pressure to provide basic needs such as water, electricity and sewage infrastructure could see the government being forced to spend more on infrastructure to provide these facilities.

The slowdown in the purchase of new trucks and buses should boost the used-vehicle market.

Taking the abovementioned comments into consideration, and reviewing the past performance of new truck and bus sales in the country, my 2016 industry forecast for new medium, heavy, extra-heavy truck and bus sales is 27 000 units.

 


One of this country’s most respected commercial vehicle industry authorities, VIC OLIVER has been in this industry for over 50 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.

 

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