Markus Geyer, managing director of MAN Automotive (pictured above), comments that 2019 was a year of significant challenges. “For example, we saw a 20% plus decline in demand for heavy buses and coaches overall, and a static demand for heavy and extra heavy trucks – when looking at year-on-year Naamsa statistics,” he reports.
It was a difficult year for many companies. “We saw a roller-coaster ride of a multitude of factors which impacted our customers in various industry segments. For example, coal haulage companies were impacted by the Eskom corporate challenges, quantity and quality of commodity tonnages available from different mines, commodity export values and foreign demand patterns of our mining products. Other challenges include social unrest in communities that straddle logistics supply routes and transport supply capacity limitations of smaller transport companies,” Geyer points out.
As a result, some haulage companies have a significant transport capacity over-supply with the consequence of much lower average fleet utilisations. This means that assets have to be financially “sweated” for an additional year or two. “Other haulage companies are actually needing to expand capacity, but they are unable to do so due to lack of firm longer-term transport contracts, or a lack of appetite by banks to extend credit to these operators,” Geyer adds.
According to Geyer, there are a number of factors that should count against chances of a growth in truck sales. “We’re facing global economic challenges, political uncertainty locally, macro-economic pressures, the possibility of a further credit-rating downgrade, non-optimal utilisation of the overall current transport fleet and transport companies have input cost pressures,” he warns.
Maretha Gerber, head of Mercedes-Benz Trucks (pictured above), agrees that we’re facing challenging times. “We believe that the overall market will at best stay flat with certain segments to contract due to the continued economic pressures on consumers. The increased demands for government to spend budgets on State Owned Enterprises will put pressure on interest rates, fuel prices and VAT. Our view is therefore that 2020 will remain challenging overall, specifically in light and medium-duty segments, as customers will continue to rather extend or downgrade in these times,” she maintains.
Leslie Long, senior manager: production planning and marketing at Hino (pictured above), shares Gerber’s concerns. “We think the market will stay relatively flat for the next year. Reasons for this include low business confidence on the back of a lack of clear economic policy from government and the cloud of a possible downgrade,” he explains.
Long says the medium and heavy commercial vehicle sectors are under pressure because of the general economic condition. “We see this continuing into 2020. Within the medium sector, we’re seeing truck sales declining faster than those of panel vans. This is presumably because of the perceived better security offered by a panel van and also the general trend of smaller loads,” he explains.
Another trend to watch, he says, is the growth of the more affordable brands. “Admittedly, this is coming off a low base. But, as a result of the general economic conditions, this is something we’re seeing in both the medium and heavy sectors,” Long reports.
Moving further up the scale, Long says that the extra-heavy sector seems to be holding up the best. “This is probably because of structured financial contracts (buy backs),” he explains. “It is our hope that this positive trend will continue; we also hope that economic activity will start accelerating towards the end of 2020 and into 2021,” he says.
Anders Friberg – vehicles sales, exports and engines general manager at Scania (pictured above) – is also hopeful that things will pick up. “I believe that the total truck market for 2020 will grow by approximately 3%. There is more political stability after the election and there is more direct investment from global investors. The replacement cycle for bigger fleets will also contribute to growth,” he believes.
Friberg is also predicting good things for certain sectors. “The construction segment will come back after a big decline in capital projects during 2019. This will also affect the mining industry that had a decline during 2019 and will recover next year. But still the biggest growth in the total number of trucks will come from long haulage. Urbanisation, population growth and a railway system that is not maintained will have an effect of the growing truck market,” he predicts.
Mercedes-Benz’s Gerber agrees that there is some room for optimism. “We do see some potential in the heavy-duty segment. Should the government invest in the construction segment, then we will most certainly see some growth in this area again. This – together with the forward buying of our customers, who are changing to more fuel-efficient trucks – could continue to stimulate the heavy-duty truck market, but we don’t foresee it growing at the same level as 2019,” she maintains.
MAN’s Geyer also says that the situation is not all bad. “On the upside of things, we note that some government investment projects, which have been on hold for a long time, are now coming to fruition. We are seeing fleet renewals and replacements from various logistics companies who have postponed such purchases for two years already. There are some growth companies that are clearly bucking the trends by significantly expanding in specific industry segments. We’re also seeing an over-supplied industry, where each original equipment manufacturer is having to show continued product, pricing and support offerings (this positively stimulates demand). The same can be said of new product introductions,” he says.
Taking all of these variables across all segments into account, Geyer is pegging the extra-heavy truck market at the same level as 2019 – with no nett major gains or losses. “The MAN team, however, has shown some resilience amidst the external market challenges, as can be seen from our continued market share and customer satisfaction growth. With our respective products performing very well in many different applications, and our suite of value-added services constantly evolving with the support of our customers, we are very confident of seeing another year of improvement for our brand in volume, market share and customer satisfaction,” he concludes.
