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CAPITAL EQUIPMENT NEWS
FEBRUARY 2017
12
for further growth. The addition of other
business divisions to our portfolio – Isuzu
Trucks Drivetrain, Isuzu Trucks Mobility, Isuzu
Trucks Genuine Parts and Kanu Commercial
Body Construction – gives us the edge to be
a one-stop shop for our customers’ needs,
while being able to customise our solutions in
the process,” says Uren.
For example, the acquisition of Port
Elizabeth based Kanu Commercial Body
Construction affords ITSA to do away with
long lead times and deliver ready-built trucks
to its dealer network. Meanwhile, ITSA’s
chassis modifications are done locally by
Automotive Chassis Technologies (ACT). Both
Kanu and ACT service the local truck fraternity
and are not dedicated
to Isuzu Trucks only.
SA truck market
dynamics
Reflecting on a
difficult year for the
South African truck
industry at large,
Uren says several
factors joined forces
for the demise of
the market. He
reasons that the
economy gauntlet
was the major setback for the truck
industry last year, with both worldwide
and local economic pressures impacting
on South Africa. GDP was under pressure,
failing to breach the 1% mark. Low
business confidence resulted in low to no
investment by business.
“2016 also started on a poor basis because
of the poor exchange rate,” says Uren. “It
was also a year of contradicting fortunes.
We started the year trying to understand the
impact of the drought and ended it with flash
floods. This had a vast impact on agriculture,
which is likely to take years to recover.”
Municipal elections also had their fair
share of 2016’s market pressures. “Municipal
elections impacted on businesses’ capacity to
make decisions. Because of the uncertainty,
businesses ought to take a wait-and-see
approach,” reasons Uren.
Pricing rates, which went up 10-15%,
impacted on fleet operators’ spending power.
The MCV segment was the hardest hit with
a -18,9% decline from 10 394 units in 2015
to 8 432 in 2016. Bearing in mind that this
market segment is mostly sustained by small,
upcoming businesses, Uren is of the view
that smaller businesses are finding it harder
to survive in current economic conditions, and
most small transport companies are going
under. It is only the bigger commercial vehicle
operators with enough capital to carry them
through the economic storm.
Despite all the 2016 troubles, Uren
somehow feels that 2017 might turn out to
be a good year for South Africa. However,
he believes that the outlook is not very
positive for the truck market, which he
expects to grow at a marginal 2-3%.
“The fundamentals of economics, with
GDP expected to grow a modest 1%, are
weighing heavily against any form of big
growth for the truck industry,” says Uren.
He believes the market will hover around
the 28 000 unit mark, falling short of the
30 000 plus mark, which he believes is South
African truck market’s “sweet spot”.
b
Total Market Segmentation
Long Term Truck Market Forecast
Top 5 – Including Van and Bus
BUSINESS