Those sharing the long road would have witnessed a large number of trucks at all the “Stop-and-Go’s” at roadworks across South Africa. This is not merely a perception – Industry experts have revealed that there is a huge demand for trucks – and the mining industry and demand for commodities are directly related to the higher demand!
We would like to quote:
“The steady improvement in global demand for base and precious metals over the past year has had a positive impact on commercial vehicle sales as SA’s mining conglomerates gear up to produce and deliver huge quantities of coal, chromium, iron ore and other metals to a growing list of domestic and international clients.
Gerald Burton, general manager for Wesbank’s corporate division, says that, given the country’s ailing rail infrastructure, the bulk of these commodities are still being moved by road.
“The market for commercial vehicles (including medium, heavy and ultra-heavy trucks and buses) grew by 16% in 2010 over 2009. From a WesBank perspective our new business was up 23% year on year in this segment of the market.”
Burton says that logistics companies are also expanding and renewing their fleets, which is being fuelled by the general economic recovery.
“This scenario has been beneficial for finance houses, which are experiencing a welcome turnaround in this market segment.
“Ironically, this time a year ago, suppliers of heavy equipment to the mining and construction industry were wondering where the next order was coming from. Now the order books are filling up and the problem has moved to the availability of stock.”
He adds that the statistics point to a continued improvement from big business, particularly those companies engaged in mining and supporting industries.
“Since late 2009, the mining sector has gathered momentum – and much of our new business is from logistics companies who need to expand their fleets to meet new contracts.
“We’ve also seen an increase in the number of companies replacing their ageing commercial fleets.”
Burton says that local vehicle manufactures will probably be disappointed with the performance in the medium commercial vehicle segment, which is expected to grow by a further 6% this year.
“The recovery is most visible in the heavy and extra-heavy truck segment and we believe this segment of the market will outperform the medium segment through 2011, as it did last year.”
He adds that new truck owners must realise the specialist nature of heavy asset finance.
“We have a team of finance specialists who sit in our commercial trucking segment. They understand the business of trucking and apply their expert knowledge to structure finance deals most suited to our clients.”
The group is optimistic for the commercial vehicle sector through 2011.
“The March 2011 Naamsa numbers show a 19% improvement against the same period in 2010,” says Burton.
“WesBank expects the full-year numbers to come in around 15% better.”
As the commodity cycle gathers momentum stakeholders in the heavy trucking sector are holding thumbs that they repeat the 37,000 unit sales achieved at the boom of the commodity cycle, back in 2007, Burton concludes. – I-Net Bridge”