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Firm July Truck Sales Provide an important pointer for future Market Direction.

With Soccer World Cup 2010 now receding into the nation's collective memory, total sales of trucks, buses and vans in South Africa during the month of July, 2010 came in slightly below those of the previous month. The total volume of 1 771 units reported last month to the National Association of Automobile Manufacturers of South Africa was 5,8% below the final audited result for the month of June, but still managed to improve on the results for January (1 262 units), February (1 758 units) and April (1 572 units).

The July 2010 market composition was made up of 616 Medium Commercial Vehicles (GVM ratings between 3 501 kg and 8 500 kg), 372 Heavy Commercials (goods vehicles with GVM ratings between 8 501 kg and 16 500 kg), 720 Extra Heavy Commercials (goods vehicles with GVM ratings above 16 500 kg) and 63 passenger Buses with GVM ratings above 8 500 kg. Understandably, with preparations for the World Cup complete, sales of entry-level MCV trucks and vans and cruiserweight HCV units, which would have been most involved in the delivery of supplies to stadia, declined slightly, by margins of 16,2% and 3,4% respectively, while premium payload XHCV trucks ran counter to the overall trend with an increase of 9,8%. Passenger bus deliveries, by now devoid of earlier SWC stimuli, declined by 39,4% in the month-on-month comparison.

Casper Kruger, Vice President of Hino in South Africa, comments: "The month of July was subject to almost two weeks' worth of World Cup distractio, with excitement rising to fever pitch as the semi-finals, third and fourth position play-off, and the final, with its spectacular closing ceremony, were completed. To the country's enormous credit, the whole event passed without any serious glitches, and this should be positive for business sentiment going forward. However, we can understand that business activities continued to be disrupted until nearly the middle of July, which is also a month in which many South Africans traditionally take leave to spend time enjoying warmer weather at the coast. Bearing all this in mind, a national truck market totalling 1 771 units for the month must be seen as a satisfactory outcome".

Kruger continues: "The year-to-date position, and its comparison with the equivalent situation prevailing up to the end of July 2009, continues to provide us with the best perspective from which to judge the market's current performance. In absolute terms, the total market over 3 500 kg GVM finished the first seven months of 2010 8,2% up on its equivalent 2009 performance. However, the most pleasing aspect is that, while MCV and HCV volumes were flat or declined slightly, XHCV truck volumes have grown, year-on-year, by more than 20%, reinforcing the view that the previously extremely challenging financing environment for these more expensive capital equipment items continues to improve. Predictably. passenger Bus volumes were also up by the substantial margin of 28,6%, but this growth can be expected to revert to more modest levels now that all the SWC-related coaches have been delivered".

Kruger concludes: "We continue to hold the view that the July market result is particularly important in gauging market direction for the rest of 2010. The steady volumes returned in both June and July, despite their disrupted trading environments, are extremely encouraging, and should form a base for modest growth now that businessmen have got their feet back under their desks and have begun to plan their way ahead once more. It is worth bearing in mind that some R800 billion in capital projects are still planned by the country's public sector in the 2011-2014 timeframe, and that this level of fixed investment activity should help to maintain impetus in truck sales, particularly in the XHCV segment. Additional buses will also still be required to complete the Gautrain feeder network, and to equip extended BRT operations as these are rolled out. Balancing this are concerns that trade union demands do not seem to be moderating now that the football tournament is over, and the country is threatened by a highly disruptive Public Service strike, which could cause havoc with the licensing and delivery of new vehicles. If the market continues to sustain its current level of activity, however, the final 2010 outcome should be better than 2009's 18 934 unit total".