 |
|
|
|
|
|
 | Commercial vehicles spinning the wheels of prosperity |  |  |
 |
|
14 May 2007
South Africa’s stellar economic growth has brought with it an unprecedented boom in the commercial vehicle market. Since 2002, the number of new commercial vehicles sold has grown by 87%.
In 2006, 231 929 commercial vehicles were sold, 107 666 more than in 2002. Of these, 80% were light commercial vehicles, 8.1% and 4.7% comprised heavy and extra heavy commercial vehicles, respectively. Annual demand for medium, heavy and extra heavy commercial vehicles has expanded by an average of 18%, 21% and 25% respectively. This compares favourably to growth in the commercial vehicle segment where demand has averaged at 11% in the last five years.
Danalee van Dyk, economist at Standard Bank, says: ”With investment in the economy’s capacity through infrastructure development and construction activity expected to gain traction over the next few years, the transport sector will play a crucial role in the implementation of these programmes.
”While the demand for medium, heavy and extra heavy commercial vehicles means that these commercial vehicle manufacturers stand to gain the most, several sectors are also relying on light commercial vehicles in the support of heavier vehicles.”
Infrastructure and investment spending is gaining momentum, and the eradication of backlogs and capacity limitations by way of rising public sector investment will further unlock untapped private sector investment spending. The construction sector is playing a pivotal role in this development.
Van Dyk says: ”The evidently strong association between the fixed investment cycle and demand for heavy duty vehicles will be heightened by the planned infrastructure, development and capacity upgrades in the next three to five years.”
”Medium-sized to extra heavy vehicles have posted strong growth so far, but should find renewed impetus after a period of consolidation. The general accelerator effect of the fixed investment boom on economic growth, which in turn increases aggregate demand, sales and profitability, will provide additional stimulus for future economic growth and development.”
Factors behind growth in the vehicle sector
-
The 650 basis point decline in interest rates since 2003 has made financing of these vehicles easier.
- Price competition as more low cost entrants enter the market.
- Lower insurance premiums.
- Increased investment in infrastructure, residential and non-residential developments.
- Unique assistance by finance houses in bringing together subcontractors and transport operators, and providing additional services to inexperienced small and medium enterprises (SMEs) whose core business is not in transport operations.
- Broad-based infrastructural development across all sectors in the economy as a result of production operations near or at maximum capacity.
- Higher economic growth, boosting demand for transportation in the industrial sector (intermediate goods to be used by other manufacturers); the consumer sector (products to be sold for final consumption); and the supply chain services sector, bolstered by increased aggregate demand.
- The ailing rail infrastructure and limited capacity, which has fanned the demand for high-speed, large-capacity, long-haul vehicles. In 2003, approximately three-quarters of transported cargo, measured in tonnes, was transported via road on the dominant inter-city freight corridors.
- Increasing demand for flexible transport in support of ?just-in-time? production and delivery, which reduces costs pertaining to goods in transit and inventory holding.
- Increased demand from sub-Saharan African countries has stimulated commodity exports, which have mostly been transported by cargo carriers. However, this has sometimes been thwarted by a stronger rand exchange rate.
- Increased demand for industry-specialised trucking operations, such as in the agricultural sector. Improved logistics technology has also allowed the integration of transport services with other processes and functions in the supply chain.
|
|
|
|
|
|
|
|
|
|
|
