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Strong sales of extra-heavy vehicles in 2013

Early predictions that the South African market for extra-heavy duty vehicles would show growth in a tough environment in 2013 are being realised. Sales figures for September showed that 1 033 new units were bought during the month, compared to the 1 011 units sold in the corresponding period last year.

Commenting on the NAAMSA figures for the segment, Sydney Soundy, head of Vehicle and Asset Finance at Standard Bank South Africa, said that sales for January to September 2013 had totalled a respectable 9,706 new units for vehicles with a mass of more than 8,500kg. This was an increase of 866 vehicles from the same period in 2012.

"The sales achieved were in line with the predictions of some of the country's major suppliers of these vehicles. The sentiment was that, while 2013 would present some challenges, the heavy truck market had weathered recent recessionary conditions and would continue to do so, despite increased competition within the transport sector."

He says that direct foreign investment in South Africa and countries north of the border, along with government spending on infrastructure development locally, played their part in driving sales.

Kathy Bell, Transport Industry Specialist in Vehicle and Asset Finance at Standard Bank South Africa, points out that funding opportunities for extra-heavy vehicle sales were created in the energy sector, with contractors committed to major projects at sites for new power stations making the required investment in abnormal trailers, extra-heavy truck-tractors and equipment.

"The lead times of these and similar infrastructure projects should bolster sales for the foreseeable future," she says. The major drivers for extra-heavy vehicle sales as seen this year is mainly replacement cycles kicking in along with a need for more fuel efficient truck-tractors and lighter trailer combination units and reduced maintenance costs associated with a new fleet. The increased kilometre span for newer trucks has reduced the down time and has also resulted in increased productivity and revenue generation.

On the back of these and other developments in the local and regional economy, several manufacturers had announced that they would be introducing new vehicles and purpose-built equipment, such as tipper-tanker trailers, to the market. This would open new niche markets for manufacturers who would be able to offer customers customised and purpose-built vehicles for various applications.

"Assisting continued sales into 2014 will be vehicle price inflation which has been lower than expected. Interest rates continue to favour purchases of new vehicles and operators who had postponed the acquisition of new vehicles, due to competitive conditions, look at replacing some of their ageing fleets," says Mr Soundy.

Turning to other matters impacting on the industry, Mr Soundy said that heavy vehicle manufacturers would undoubtedly be considering the carbon dioxide emission requirements of customers. Constraints in the supply of 50ppm quality diesel in South Africa, which is suitable for Euro 4/5 engines, will play a major role in the fleet replacement cycle and upgrading of the fleet to reduce carbon emissions.

Green issues and trucks that limit carbon dioxide emissions are becoming increasingly important factors in fleet and supplier selection. This is especially the case for fleet operators who service multinational supply chains who are demanding 'green' compliance from their transport suppliers.

The current focus by transport operators is to reduce the fleet's carbon footprint mainly through well maintained vehicles enhancing fuel consumption,better route management and reducing "dead" kilometres. Road transport, according to industry figures, presently accounts for the production of 2 664 kg of carbon per litre of diesel consumed.

"Given this scenario, we believe that it is very likely that carbon taxes will become a reality for fleet operators in South Africa. This will galvanise the move towards more fuel efficient, new generation vehicles in 2014 and beyond," says Mr Soundy.

Find out more about Standard Bank South Africa's car, truck and equipment finance solutions, see www.standardbank.co.za.

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