Oil prices, weak rand to curb commercial transport

Absa expected growth to slow next year across the board in small-, medium- and heavy-vehicle acquisitions.

The transport industry has turned for the better, seeing increased employment and capital expenditures in 2011, said Marcel de Klerk, head of Business Markets at Absa.

Commercial-vehicle sales grew by 15-17% year-on-year, with tractors seeing an impressive 45% sales jump.

But most of these purchases were forced replacements for old vehicles, De Klerk said.

"They should have been replaced at the beginning of last year, and it couldn't happen because of cash-flow reasons," he said. "So the majority of the growth that we're seeing is still not...new expansions."

Now that these replacements have been made, Absa predicted commercial-vehicle sales growth to come in "south of 15%" in 2012. Tractor-sales growth was also expected to shrink to 15%.

Keri Kirsten, head of Absa's fleet-management division, added that the average vehicle contract length had stretched from 38 months to 43 months. And while fleet-industry growth was flat, Absa clients' small-vehicle purchases spiked up 106% from last year.

"This just shows clients are buying down. They're buying smaller vehicles that use less fuel," he said.

Expensive and volatile fuel prices hindered growth, he said. Fuel priced at R10 per litre could account for 40% of a fleet's cost.

The recently weak rand negatively impacted growth as well, he said.

"Even a tiny change, a one rand-to-dollar change, can indicate a 12% impact - and it's an immediate impact," he said. "The next shipment of parts that arrives [is] immediately subject to that. So it comes through very, very quickly and has a significant impact on parts pricing, vehicle pricing and fuel prices."

Kirsten predicted fleet "greening" would continue to gain steam, although companies were motivated more by cost-benefit reasons than environmental ones.

"I think with the severe pressure on businesses in the current business world, you need to survive first. [The environment] tends to take a back seat, but the flip side is that with the cost of fuel, there's no better way to save money than [by] burning less fuel," he said. "And burning less fuel has a massive green impact straightaway."

Legal changes including new tolls, taxes and the introduction of the Administrative Adjudication of Road Traffic Offences (Aarto) system amplified industry uncertainty. More clarity from government was necessary so that companies could accurately factor these expenses into their budgets.

Despite the challenges, the number of clients in arrears had shrunk by 40% from last year, and Absa was keen to lend much more than it was today, De Klerk said.