Decline in truck sales starts to slow

VEHICLE manufacturers expect the precipitous decline in the truck market to bottom out in the second half of this year.

Last week manufacturers said the rate of decline in new truck sales was stabilising.

In April, sales fell 63% year on year and in May declined by 57%. David van Graan, an executive at MAN Truck and Bus SA, said the decline slowed to 53% last month.

The market was reaching a bottom, he said. “We believe the truck market will decline in the third quarter. But we see year-on-year declining stabilising in the fourth quarter.”

Craig Uren, chief operating officer at Isuzu Truck SA, said the latest truck sales figures indicated that the market might have started to stabilise.

This sign of stability provided some relief to truck manufacturers, who saw their volumes shrink after companies such as miners, manufacturers and retailers froze their investment plans amid the financial crisis and economic downturn.

Medium-sized truck sales slumped 53,7% last month, while heavy truck and bus sales fell 51,4%, the National Association of Automobile Manufacturers of SA reported it its latest vehicle sales data last week.

But Nedbank remained pessimistic. It said sales of commercial vehicles were expected to decline further as overall economic activity stayed weak and fixed investment activity continued to fade.

Unfazed, the chief operating officer of Nissan Diesel SA, Johan Richards, said the truck market’s performance last month had given the industry an injection of encouragement after an extended period in which the market had failed to find a bottom.

Most transport companies entering a new financial year this month would have capital available to spend on new trucks, Richards said.

Van Graan said the escalating number of sales inquiries, coupled with a surge in fleet replacement, had strengthened his conviction about the prospects of recovery.

In particular, he said truck fleets at some companies had reached what MAN Truck and Bus SA called “optimum replacement point” — the natural life of a truck.

Uren said the wait-and-see attitude towards vehicle replacement was slowly changing, as fleet operators started replacing their fleets again.

For the past nine months these companies had been delaying replacing their fleets, in large part due to the credit crunch, low business confidence, high interest rates and lack of consumer spending.

Clients who were buying trucks fund their own vehicles, he said. These included parastatals and well-run companies with solid cash flows. He said the bank credit door was still shut on 70% of clients who applied for vehicle finance.

Ignatius Muthien, senior marketing manager at Toyota Trucks, said the percentage of vehicle finance inquiries received by Hino SA had declined from 80% at the beginning of the year to 60%, which might be attributed to certain banks financing more deals.

Construction within the building industry would continue to stimulate demand for trucks such as tippers and concrete mixers, he said.

Sourced via businessday.co.za