Home News

UDTSA plans 2017 truck sales comeback

98
0
SHARE
UDTSA
Skills shortages have been identified by numerous research reports, including Barloworld's supplychainforesight

[prisna-google-website-translator]

UDTSA to recapture lost market share

UD Trucks Southern Africa (UDTSA), held its 2016 market review and 2017 forecast event last week at the Intercontinental Hotel at OR Tambo International Airport.

Company vice president, Gert Swanepoel, kicked off by saying the company had moved to a brand-based organisation on 1 March 2016, despite remaining part of the Volvo Group internationally.

“There is now clear direction. Everything has moved back to Rosslyn in Pretoria, and everything is now under one roof,” he clarified.

Swanepoel explained that UDTSA was a customer-centric company. “The support structure has been established overseas. In the past we received support from Europe and product from Japan, which was a problem,” he conceded.

Parts availability also proved problematic, with the Volvo Group moving everything to one central warehouse in Johannesburg.

But, the renewed focus has already realised results for UDTSA, he says. “We’ve seen an improvement in our CSI scores. We are positive about 2017, and the team is well-established. We are ready to offer the dealer network product. It is very exciting on the product side,” he intimated.

Swanepoel explained UDTSA was particularly upbeat about Kenya and surrounding countries in the South-East Africa region. “We’re looking for a strong partner to take care of Kenya and Uganda for us. Things can change very quickly and we need to be there,” he added.

Some 80% of the 18 countries UDTSA is responsible for in Africa recently placed in the top 40 fastest growing economies in the world. He says the UD Trucks team will increase shortly to better serve customers outside South Africa.

Kenya sold 4 002 new trucks in 2016 and UDTSA is expecting significant growth of 75% in that country, to 7 000 units this year. “That’s why we need to get the KD (knocked down) operation going there,” he says, before explaining that there have been changes in the rate of import duties paid on Completely Built Up (CBU) units in that country.

Back home, the focus will be looking after customers, increasing uptime, and growing the number of maintenance and service contracts.

Swanepoel relayed how UDTSA had recently had an exclusive visit from Volvo Group CEO, Martin Lundstedt, saying the message from Lundstedt was that the region must decide (what to do) and that it must run with the UD Trucks brand.

Recommended: New truck sales could rise in 2017

Marketing manager, Rory Schulz, then provided an economic overview of the local, regional and global truck industries.

He said economic growth of 1.6% had been achieved in advanced economies last year, while the BRICS nations had collectively achieved 4.3%. He said developing countries had grown 3.5%, while sub-Saharan Africa (SSA) countries had only achieved 1.5%.

Despite global political pressures, policy changes (Brexit) and economic uncertainty, he expected, on average, economic growth of around 3.4% to materialize in 2017. He said China would continue to play a leading role in world commodity prices, which were critical to SSA.

He noted that the new South African truck market picked up in the third and fourth quarters every year, but slowed in the first quarter the following year. The country had ended 2016 with a measly 0.1% of economic growth.

“It has not been smooth; we are not seeing continuity. There are constant interruptions to growth,” he said.

The South African new truck market in 2016 declined 11% compared to 2015, with the bus segment (+8.2%) the only segment to experience growth thanks to re-fleeting by the Golden Arrow Bus Company and Putco.

The light duty segment was the single worst performer in 2016 (-18%), while medium commercial vehicles were down 4.2% and heavies declined 10.1%.

Despite being the second-largest UD Trucks market outside Japan, UDTSA has lost significant market share in recent years, having left the light-duty segment. It is also beset with aging products and few derivatives in the medium and heavy segments.

But Swanepoel says 2017 should realise a slightly different picture for the company as it introduces new products.

Still, the company expects 2017 to be a difficult year. “We need to go out and find the business and fight for every unit,” says Schulz. That said, positives can be drawn from an expected rise in fixed investment (up 2.2%) and GDP (up 1.5%.) this year.

“Commodity prices are looking up; we are coming out of the drought and the ZAR is strengthening. On the negative side, we have rising political tensions, the credit ratings issue and an increase in taxes are expected,” elaborated Schulz, who is bullish about the local new truck market, expecting growth of around 3% in 2017.

Schulz explained that having visited customers in Q4 of 2016 and already this year, the impression he got was that several companies were financially paralysed in 2016. “Many are fed up and say they are going to start running their businesses again this year,” he relayed.

Schulz said South Africa needed to re-ignite its economy and questioned why the most sophisticated economy in the SSA region was struggling the way it is.

He said South Africa had lost its economic initiative, pointing to how other SSA countries were making large-scale infrastructure investments. While South Africa has 18 special infrastructure projects in the pipeline, Schulz said the country was hamstrung as it continued to debate its future energy strategy.

While the country had the expertise, having built the Gautrain and several hospitals, it had only completed 7% of all Africa’s major construction projects. South Africa is also not playing a big role in imports into the SSA region, which means there is a great opportunity for local business to do so, he said.

“South Africa has a lot of good stuff happening in terms of road freight companies and infrastructure, but our overall logistics performance isn’t great. The cost of logistics is too high, and we have safety and affordability issues,” he elaborated.

He believes the road freight industry cannot be treated separately and needs to be incorporated into the general economy. Schulz said there needed to be a balance found between government regulation and the cost/quality of transport.

“We should have more duty-free trade areas, but somehow duties are being added and some manufacturers are struggling to get parts into Botswana for example.”

He said much was being said about fuel quality levels in South Africa, with oil companies pushing for Durban refinery upgrades by 2019.

He concluded by saying the Eicher trucks brand is in the process of entering the local truck market and was appointing the sales teams and dealers.

The Eicher brand would utilise “backroom support” from UDTSA, with the arrival part of the Volvo Group’s global trucks strategy. However, the Group’s brands will remain entirely autonomous, per European directives.

“We will also upgrade the Rosslyn plant by the end of 2017,” Schulz confirmed.

Connect with Road Transport News on LinkedInFacebookTwitter and Instagram.

Get your newsletter now!

Subscribe to our mailing list to get the week's best content in your inbox.

Thank you for subscribing!

Sorry, something went wrong :-(